Copper prices rose on Monday, as concerns about Chinese demand abated, and tin prices hit a record high with supply constraints supporting the outlook for both metals. A weaker US dollar also helped metals, by making dollar priced commodities cheaper for other currency holders.
Benchmark copper on the London Metal Exchange closed at $9,529 a tonne, versus $9,441 at the close on Friday. The metal used in power and construction hit a record high of $9,781 a tonne on January 19.
Tin hit a record high of $28,190 a tonne, and closed at $28,095. "Tin and copper are very supply constrained metals, that's not going to be resolved for many months, if not years," Robin Bhar, an analyst at Credit Agricole, said.
A widening market deficit could propel copper to new record highs this year, as exchange-traded products and a narrowing supply surplus buoy prices, according to a Reuters poll on the outlook for base metals. The consensus of 50 forecasts showed the cash copper price would average $9,663 a tonne this year.
Tin prices are forecast to rise almost 38 percent this year, according to the average of 24 forecasts, the Reuters poll showed, propelled by dwindling reserves and unusually wet weather in big producer Indonesia, and rising demand.
Investors fretted about Chinese demand last week, after strong economic growth data there raised concerns about further monetary tightening in the world's top base metals consumer and fanned worries about its demand outlook. But these fears eased, with analysts broadly confident Chinese demand would remain robust even in the case of monetary tightening.
"With the data coming in strong last week for economic growth there is always the scope for them to raise rates," Bhar said, but he added that the market was not going to turn tail.
Stocks of copper at LME warehouses resumed a recent rise, which has caused some caution among investors. Stocks last rose 200 tonnes to 381,500 tonnes.
Lead stocks rose 2,600 tonnes to 266,775 tonnes, lingering around the highest levels since May 1995. Investors kept an eye on a dominant position controlling 80-90 percent of lead stock warrants and cash contracts on the LME.
Barclays Capital declined to comment on Friday on market talk it was the holder of the position. The battery material, was last at $2,405 a tonne from $2,425 a tonne.
Investors also focused on the backwardation on lead - a premium for cash material over the three-month contract - which was at $60 a tonne.
The premium shot up to $85 a tonne on Friday, its highest since October 2007. In late December, in contrast, there was a contango on lead of $0.50 - a discount for cash over three-month material. Aluminium closed at $2,413 a tonne, from Friday's close of $2,420. Zinc ended $2,302 a tonne from $2,318 a tonne.
Undermining prices in lead and zinc, both metals fell through their 100-day moving averages on the charts, a technically bearish signal. Nickel closed at $26,150 a tonne from $26,175 a tonne.