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Copper Dips From Record High Amid Profit-Taking
8 Jan
Summary
- Industrial metals futures, including copper, nickel, and zinc, declined sharply.
- The market pullback follows a rapid price surge fueled by investment inflows.
- Nickel supply risks in Indonesia and Chinese Lunar New Year stocking are factors.
Industrial metals experienced a notable retreat, with copper futures sliding from record highs. Nickel and zinc also saw significant declines on the London Metal Exchange, reflecting a broader market pullback. This shift occurred as investors took profits following a rapid price surge, which had been fueled by substantial investment inflows into China's domestic metals markets over recent weeks.
The sharp run-up in prices had been driven by various factors, including production disruptions at major copper mines and large shipments anticipating tariffs. Nickel, in particular, saw a blistering rally towards the end of the previous year, reaching a 19-month high. However, the speed of these gains has led to profit-taking, with analysts noting that the underlying nickel market remains in surplus despite supply concerns in top producer Indonesia.
Supply-side pressures in Indonesia, including potential production cuts and stricter enforcement of forestry permits, are ongoing concerns. Additionally, active buying requests from China for nickel pig iron, attributed to industry stocking ahead of the Lunar New Year, have contributed to market dynamics. Despite these factors, surging global inventories, especially evident in a six-year surge in LME stockpiles, continue to exert downward pressure on prices.
