LONDON: Copper prices pulled back on Tuesday, pressured by a firmer dollar, lower risk appetite and as investors locked in profits from a rally to a record high touched in the previous session.
Benchmark three-month copper on the London Metal Exchange was down 0.4% to $11,202 a metric ton by 1015 GMT, having hit a record peak of $11,334 on Monday.
LME copper has gained 27% so far this year, mainly due to worries about potential shortages.
“We’re pausing a bit today after we saw the dollar recover somewhat and lower risk appetite in general,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Stocks made muted gains and traders were wary on Tuesday, following a slide in cryptocurrencies and a global bond selloff.
The dollar rose against the yen after an auction of Japanese government debt drew solid demand. A firmer dollar makes commodities priced in the U.S. currency more expensive for buyers using other currencies.
“Copper remains in a buoyant mood, but we’re in need of a correction, and as long as we hold $11,000, we’re poised for higher prices as the outlook for next year points to a tight market,” Hansen said.
More copper has been flowing to the U.S. as investors reap profits from arbitrage between the U.S. Comex exchange and the LME by delivering to warehouses in the U.S.
The market is also assessing the impact of major Chinese smelters’ plan to cut production by 10% next year.
Smelters’ plan to cut output reinforced the outlook that the supply of refined copper will turn tight, analysts at Chinese broker Jinrui Futures said in a note.
The most-traded copper contract on the Shanghai Futures Exchange closed daytime trading nudging 0.1% higher at 88,920 yuan ($12,574.60) per ton, after touching a record high of 89,920 yuan a ton earlier.
Among other metals, LME aluminium edged up 0.1% to $2,896.50 a ton, lead also added 0.1% to $2,003 while zinc slipped 0.4% to $3,085, nickel shed 0.2% to $14,900 and tin lost 0.4% to $39,000.
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