LONDON: Copper prices rose on Tuesday on optimism about economic recovery, but volumes were low and analysts cited the potential for more downside.
World stocks hovered close to record highs and the World Bank raised its global growth forecast to 5.6% for 2021, marking the strongest recovery from a recession in 80 years.
Three-month copper on the London Metal Exchange had gained 0.7% to $9,969 a tonne by 1600 GMT after slipping by 0.6% in the previous session.
“A correction is needed and prices are still too high, they have decoupled from fundamentals. We could see much lower prices before they go up again,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.
If a downturn was steep, prices could go as low as $8,000 a tonne, he added.
Copper has retreated since touching a record peak of $10,747.50 last month, but is still up 29% year to date, fuelled by speculation that a green revolution would spur new demand.
“Copper will be in high demand for future technology, but this will be a driver in a few years, not in the next few months,” Briesemann said.
Shanghai copper prices closed 0.4% lower at 71,420 yuan, as fears of US monetary policy tightening and softer demand in top consumer China pressured prices.
The Yangshan copper premium was last at $28 a tonne, hovering around its lowest since February 2016 and down 75% from May 2020, indicating weakening demand for imported metal in China.
Indonesia aims for three nickel smelters to be completed and operational this year, a government official said.
LME cash aluminium moved to a 50 cent a tonne premium to the three-month contract, the first premium in a month, indicating nearby LME supplies are tightening.
LME aluminium rose 1% to $2,449.50 a tonne, nickel added 0.3% to $17,945, zinc climbed 0.5% to $3,013.50, lead advanced 1.4% to $2,184 and tin gained 2.1% at $31,160, after touching a decade-high of $31,470.
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