Copper fell on Tuesday as its rebound from Friday's 2 percent drop was arrested by concerns that the market had become overextended during this month's push to three-year highs above $7,000 a tonne. Nickel jumped sharply around the close of open outcry trading meanwhile, to end the day up more than 5 percent. It hit its highest in more than two years in later electronic trade.
Copper has still risen more than 5 percent this month, benefiting with other commodities from hopes that rising demand from China and the United States would boost prices. However, it is struggling to maintain early gains. "Demand indicators look relatively poor for copper, and I don't see the supply side as being particularly tight," said Oxford Economics analyst Daniel Smith.
"I think it has just been caught up in this macro story about China improving and investors coming into commodities quite generally. I see that as overdone in copper." Three-month copper on the London Metal Exchange closed at $6,839 tonne, down 0.4 percent and less than 1 percent above Friday's two-week low of $6,782.50.
LME nickel closed up 5.3 percent at $12,295 a tonne. In electronic trade it hit its highest since June 2015 at $12,455 a tonne. Volumes are expected to be muted this week as traders, producers and end-users gather in London for a key industry conference. LME copper could retest support at $6,787 a tonne after its bounce from this level failed to extend above $6,888, said Reuters technical analyst Wang Tao.
The world's biggest copper miner, Codelco, has raised its 2018 physical copper premium to European buyers to $88 a tonne from the $80 to $85 range this year, copper industry sources said. Chile sees copper prices averaging $2.95 per pound next year, up from an average of $2.77 this year, mining minister Aurora Williams said, citing a persistent market deficit.
World stocks headed for a record 12th month of gains as Europe outshone Wall Street, while the dollar edged up and US Treasury yields were steady. LME zinc ended the day up 1.7 percent at $3,265 a tonne, while lead closed 0.2 percent higher at $2,414. The premium of cash LME zinc over the three-month contract rose to $63 a tonne from $57.50 at the end of last week, climbing back towards the $91 Oct. 12 peak. LME tin finished down 0.1 percent at $19,375 a tonne, having earlier touched a 3-1/2 month low of $19,020. Aluminium ended 0.1 percent lower at $2,160.