Copper eased on Friday as some investors questioned whether recent gains were exaggerated and not fully supported by supply and demand fundamentals.
Benchmark copper stormed to $7,000 a tonne on Wednesday, its highest in 28 months and up more than 50% since late March, partly owing to rumours that China would soon announce a stockpiling plan.
“There’s fundamental support for the copper market, but does that justify $7,000? I don’t think so, it’s more at the upper end of what the fundamentals justify,” said Carsten Menke, analyst at Julius Baer in Zurich.
“But the downside should likewise be limited … People still think the COVID pandemic could cause supply disruptions.”
Three-month copper on the London Metal Exchange (LME) fell 0.4% to $6,897.50 a tonne in official trading.
“We are now neutral to bearish towards prices in Q4 as technical indicators suggest the metal price rally is overextended,” Fitch Solutions said in a report.
Wider financial markets were in a tight range as traders awaited a breakthrough in economic stimulus talks in Washington.
* LME zinc bucked the weaker trend, rising 0.1% to $2,580 a tonne after touching $2,587 on Thursday, its strongest since May 2019.
“We have noted CTA buying of late being met by a producer offer,” Alastair Munro at broker Marex Spectron said in a note, referring to Commodity Trading Advisor funds.
* China’s securities regulator on Friday said that it had approved an international copper futures contract for launch on Nov. 19.
* China reverted to being a net aluminium exporter in September, official data showed, as the price gap between foreign and domestic metal narrowed, making shipments from overseas more expensive and reducing import volumes.
* LME aluminium dipped 0.2% in official activity to $1,842.50 a tonne, nickel fell 0.1% to $15,796, lead lost 0.1% to $1,809 and tin was down 1% at $18,500.
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