Copper prices fell on Thursday after touching 14-month highs the previous day, weighed down by a stronger dollar and investor concerns that prices had run ahead of weak fundamentals. Benchmark copper on the London Metal Exchange closed at $6,790 a tonne from a close of $6,880 on Wednesday, when the metal used in power and construction hit a peak of $6,992 - its highest since late September 2008.
"We've moved up a tremendous amount in the last three days," said Justin Lennon, an analyst at Mitsui Bussan Commodities in New York. "It's all this sideline money that wants to get into commodities." Highlighting the poor fundamentals, latest LME data showed copper stocks rose 6,450 tonnes to total 420,550, their highest since late April. Shanghai copper stocks are at their highest in five-and-a-half years.
Copper prices have risen more than 120 percent this year, benefiting from dollar weakness, Chinese buying, new investor cash and improving economic data. "It seems that the infatuation with commodities continues despite less than stellar fundamentals," MF Global analyst Edward Meir said in a note, adding $7,500 looks to be the next resistance for LME copper "as charts seem to be wide open".
Copper is up about 4 percent this week, its biggest gain in nearly a month, although the metal failed to rise past $7,000 on Wednesday as poor US housing data rattled investors. Underpinning copper was news that BHP Billiton halted all operations at its Spence copper mine in Chile after striking workers invaded the installations.
Among other metals, aluminium, used to make vehicles and packaging, ended at $2,031 a tonne from $2,065 with latest LME data showing stocks surged 35,925 tonnes to total 4.595 million tonnes, near record levels. LME aluminium stocks have risen sharply this week, with a lot of the deliveries going into warehouses in Detroit indicating demand from the auto sector was weakening.
But Citigroup analyst David Thurtell said the market overlooked bearish stocks data as a lot of aluminium was tied up in financing deals and not available for consumption, while options trade was also supportive. An option gives a holder the right to buy or sell a three-month contract in the future at a fixed price known as the strike. On Wednesday, aluminium hit $2,095 a tonne, its highest since early August.
Zinc closed at $2,215 from $2,248, while stainless steel-making ingredient nickel, the worst performing metal in recent weeks, ended at $16,975 from $17,200. LME zinc stocks are at four-year highs, while nickel stocks are at 15-year highs, as demand from the stainless steel sector remains weak. Battery material lead closed at $2,332 from $2,403, while tin ended at $14,860 from $15,195.
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