Copper prices slipped with other commodities on Wednesday as investors seeing a firmer dollar took profits, while tin hit a new record high. Tin touched $24,210 a tonne, a gain of nearly 8 percent from Tuesday's close, on worries about supplies from top producers China and Indonesia.
Copper for delivery in three months on the London Metal Exchange ended down $8,555 a tonne, from an earlier high of $8,735 and compared with $8,700 on Tuesday. Prices are up around 30 percent this year.
A rising US currency makes commodities denominated in dollars more expensive for holders of other currencies. The dollar tumbled against the euro on Tuesday to beyond $1.60 and was last trading around $1.59. "It's not just metals. The whole commodity sector is weaker. The dollar is a little bit stronger in comparison with where it was yesterday. People are taking some chips off the table," said Eugen Weinberg, commodities analyst at Commerzbank.
Copper, used widely in the power and construction industries, hit a record high of $8,880 a tonne last week on news of strikes at mines run by Chile's Codelco. But news that Codelco's Teniente mine, the world's largest underground copper mine, had resumed operations hit sentiment.
However, traders said prices would be underpinned because two other divisions - Andina and Salvador mines in Chile - are still shut. Tin prices are up by more than 40 percent this year on concern about supplies and falling stocks in LME warehouses, which at below 8,000 tonnes are nearly half the level they were at in August last year.
"Both tin and copper are responding to the supply problems that are very evident," analyst Kevin Norrish at Barclays Capital said. Tin closed at $24,100 a tonne from $22,475/22,500.
"Even though there is fundamental justification for higher prices, the pace of the latest advance suggests a danger of overheating," Weinberg said. Aluminium ended up slightly at $3,095 from an earlier session high of $3,130 a tonne and $3,085 from Tuesday.
"The rally is being driven by news from China that power stations' coal reserves have dropped to only 12 days' worth of supplies, down from 15 days in March," Weinberg said, adding that the guideline set by the government is 14 days. Analysts say almost 80 percent of China's electricity is generated from coal and that a shortage would hit the energy-intensive aluminium industry. Zinc closed at $2,239 from $2,270/2,271 on Tuesday, lead at $2,805 from $2,840 and nickel at $28,700 from $28,900.