Copper hits two-week low; zinc highest in more than a decade on stock worries

LONDON — Copper hit a twoweek low on Monday, weighed down by a stronger dollar and as the market consolidated following sharp gains in December, while zinc again reached its highest in more than a decade on supply concerns.

The dollar rose against the euro, making dollar-priced metals costlier for non-US investors, while world stocks were near alltime highs as the best start to a year in eight years showed little sign of abating.

“We had a very strong period at the back end of last year (and) in 2018 we still have supply side growth (in copper) with new mining projects coming online,” said Bernstein analyst Paul Gait, adding however, that he still expected copper to be “pushing higher over the course of 2018.”

Copper speculators raised their net “long” or buy positions by 13,604 contracts to 113,124 contracts in the week to Jan. 2.

In zinc, the cash contract on the London Metal Exchange (LME) traded at a $26 premium to the three month benchmark, up from a $10 discount on Dec. 12, the latest indicator of supply tightness in the metal used to galvanize steel.

LME copper ended up 0.10% at $7,125 a ton, having hit its lowest in two weeks at $7,105. Prices on Dec. 28 topped out at $7,312.50 a ton, the highest since January, 2014.

Aluminum closed down 1.30% at $ 2,175, having hit its lowest in nearly two weeks at $ 2,171 with Shanghai Futures Exchange stockpiles at record highs, up some 660% since the start of last year.

“Aluminum has lost around 3% (this year) as the market does not show any signs of tightening despite two months of heating season capacity cuts in northern China. Inventories continued to build in recent weeks,” said Julius Baer in a note.

“We believe aluminum should remain well supplied (and) stick to our cautious view on aluminum and industrial metals. Without sounding too pessimistic about global growth, the likelihood of a slowdown is bigger than that of an acceleration.”

As China tightens restrictions on imports of foreign waste, Chinese metal recyclers and even smelters like Jiangxi Copper Co. are increasingly looking to use Southeast Asia as an alternative location for processing copper scrap.

Zinc closed up one percent at $3,386, having hit its highest since 2007 at $3,390 as concerns over dwindling stockpiles and a market deficit persist.

A large “short” or sell position holder has emerged in lead futures, at 20-29% of outstanding positions for February, and 30- 39% for March. Data also showed one entity holds 40-50% of lead “warrants” or ownership titles.

Lead closed up 2.50% at $ 2,604, tin closed up 0.10% at $20,000 while nickel closed flat at $12,530. —