London Metal Exchange copper prices were mostly steady in Asia on Monday amid subdued trade due to holidays in key markets, traders said. Market holidays in Japan, Hong Kong and South Korea slowed trade as some questioned whether funds had lost confidence in the commodities bull run on steep falls by nickel and continuing increases in base metal stock levels.
Key three-month copper prices were at $3,508/$3,513 a tonne, versus $3,510 at Friday's London close.
"I think it's a consolidation phase we're going through," a Hong Kong trader said. "People are getting used to these higher prices.
We get these pull backs from time to time, but I don't think it's going to be the end of the story by any stretch of the imagination," the trader said. This month copper hit all-time highs of $3,725. Copper stocks in LME warehouses rose by 1,050 tonnes to 81,325 tonnes on Friday.
The red metal was trading above support at $3,500, with traders watching to see if fund selling later might push it lower. "If the funds and CTA's (Commodity Trading Advisor) come out later and start selling we could see if fall well below support at $3,500," a trader in Singapore said.
Shanghai copper futures were lower, with the most active contract, December, falling 160 yuan to 33,680 yuan a tonne. LME nickel futures for delivery in three months were untraded at $13,100/$13,200 a tonne, just off 9-month lows of $12,825 hit last week on news of an averted labour strike in Canada.
Some analysts have said such sharp falls could shake confidence in other base metals among funds, sparking a move to assets where returns are seen higher, such as bonds, currencies, equities and energy.
Others say the trend of higher prices is set to remain.
"We're forming a base for a new cycle.
The fact is we've got high energy costs and those are here to stay and that's going to be reflected in the costs of all raw materials across the board," the Hong Kong trader said.
Zinc futures were at $1,350/$1,355, up a tad from $1,350 after three days of mediated labor talks between Teck Commence Ltd and striking workers at its Trail zinc and lead refinery in British Columbia broke down again.
Aluminium slipped a touch to a new two-month low of $1,792, it's lowest since July and down from Friday's close of $1,799.
In precious metals, gold traded just below last week's 17-year highs in Asia on Monday, but some gains in the dollar and an increase in long positions in New York worried some investors and could cap further gains.
Spot gold was quoted at $459.90/460.40 an ounce I afternoon trade, versus $459.40/460.10 last quoted in New York and London's on Friday afternoon fix at $457.20 an ounce.
Gold hit as high as $460 in trade in Asia but some dealers said the metal was ripe for a correction and may have trouble surpassing on Friday's 17-year peak of $460.10. Lead was untraded at $845/$850, as was tin at $6,300/$6,400.
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