Wednesday, 25 March 2015 17:13
LONDON: Copper dipped on Wednesday as some investors sold to lock in recent gains while nickel also fell after inventories hit an all-time peak, highlighting a glut of metal.
A retreat in the dollar has helped fuel gains in base metals over the past week with copper surging more than 10 percent trough-to-peak over the week to Tuesday.
“After the significant bounce we’ve seen over the past week led by copper, it’s not completely surprising that base metals are coming off ever so slightly,” said Nic Brown, head of commodities research at Natixis in London.
Three-month copper on the London Metal Exchange slipped 0.6 percent to $ 6,108 a tonne by 1100 GMT.
It ended the previous session little changed after stretching to $ 6,203.50 a tonne – its highest since Jan. 5. Traders say copper has entered a higher band of consolidation, underpinned by the 100-day moving average at $ 6,084.
The current dip is expected to be a temporary set-back, however, and copper is due to resume its uptrend, supported by less growth in output than expected, Brown added.
“The fall in copper prices has been affecting copper output faster than we thought it would. It was already happening in Q4 last year and we expect it to be a more significant drag on copper production in Q1.”
Analyst Matthew Fusarelli at AME Group in Sydney forecast a 410,000-tonne surplus this year, but said that could dwindle on supply threats. “I think copper this year will do better than many expect,” he said.
One supply threat has been a drought that has blighted the world’s biggest copper producer Chile for the last several years, spurring the government to invest in desalinization plants and reservoirs, the country’s president said.
Losses on metals markets were limited, however, as the euro climbed towards $ 1.10 against the dollar, encouraged by a robust German business morale survey that added to expectations that an economic recovery in the euro zone is strengthening.
A stronger euro boosts the purchasing power of buyers in Europe paying for commodities priced in the U.S. currency.
Nickel dropped 1 percent to $ 13,805 a tonne after LME inventories rose to a record high of 433,980 tonnes.
Aluminium shed 1.1 percent to $ 1,771 a tonne, even after top producer Rusal said it was considering shutting down more smelters.
Copyright Reuters, 2015
