Copper near record high

Copper rose near record highs on Friday on concerns about tight supplies and after strong Chinese import data boosted the demand outlook, but the metal pared gains as a rising dollar deterred non-US buyers. Investors fretting about China's monetary policy and demand outlook took comfort when the country announced a milder-than-expected form of monetary tightening.
The market also eyed the launch of physically-backed base metal exchange traded products (ETPs), which some believe could exacerbate price volatility and market tightness. Three-month copper on the London Metal Exchange closed at $8,980 a tonne from $8,940 at the close on Thursday. The metal used in power and construction rose to $9,031 a tonne after data showed US consumer sentiment rose more than expected in early December, bolstering the demand outlook.
China's imports of copper rose 28.5 percent to 351,597 tonnes in November, after a slump in October. UK-based ETF Securities launched physically backed copper, tin and nickel exchange-traded products on Friday, giving investors access to real metal rather than derivatives such as futures. Some consumers worried the ETPs, mostly aimed at institutional investors looking for exposure to hard assets and protection against inflation, will leave them short of copper.
"There are still worries around that this will reduce the amount of material available," a trader said of the launch. "But until we see the real effects, we can't say. Everyone has pre-empted the fact that there will be a shortage of material." Supply shortages have been a major factor behind the surge in copper prices in recent months, due to a combination of falling ore grades, labour problems and project delays.
A trend of falling LME inventories this year has fuelled supply concerns. Latest data showed copper stocks slipped 825 tonnes to 348,625 tonnes, having fallen from 6-1/2 year highs at 555,075 tonnes hit in mid-February. Worries about supplies in the near term have pushed the metal into a $35 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of $20 a tonne in late October.
Among other metals, aluminium closed at $2,308 versus $2,338 a tonne. Steel-making ingredient nickel was at $23,980 a tonne from $23,600, while battery material lead closed at $2,390 from $2,405 a tonne. Zinc was at $2,274 from $2,300 a tonne, while tin was at $25,800 a tonne from $25,895.