Copper (HG-FT) steadied on Thursday, lingering just below the previous day's 14-month high as fears about a Dubai debt problem eased, but the latest hefty rise in copper stocks kept sentiment on a leash.
Three-month copper on the London Metal Exchange stood at $7,125 (U.S.) a tonne at 1042 GMT, unchanged from Wednesday's close. It touched a day's high of $7,166, near the previous session's peak of $7,170, the best since late September 2008.
LME stocks of the metal used in power and construction climbed 2,400 tonnes to 445,400 tonnes, their highest level since late April.
“These copper stocks keep going up and up. At some stage people are going to wake up to that,” said Charles Kernot, an analyst at Evolution Securities. “Sentiment is on the sidelines at the moment.”
The market is starting to shake off jitters about a Dubai debt problem that rattled global equities and commodities in the past week.
“There's been so much activity over the past few days that the market feels it needs to take a breather,” Mr. Kernot said.
An eighth straight monthly decline in U.S. job losses, and a bullish outlook by the Federal Reserve, helped offset concerns about Dubai.
Prices were also underpinned by the dollar softening against a basket of currencies. A weaker U.S. currency makes dollar-priced commodities cheaper for other currency holders
Stellar Rally
Copper has risen more than 130 per cent this year, on track for its biggest annual increase since at least 1978.
But it is still far off a record $8,940 struck in July last year, before the collapse of global markets in the last quarter.
Chile, the world's biggest copper producer, expects copper prices to stay at “good levels” in coming months despite rising inventories, its mining minister said on Wednesday.
Aluminum (AL-FT) was at $2,152 from $2,157. It earlier hit $2,166, its highest since late October 2008.
Stocks of the metal used in transport and packaging fell 2,825 tonnes but remain near a record high in the region of 4.6 million tonnes.
Zinc was at $2,427 from $2,420 and battery material lead was at $2,470 from $2,480.
Tin traded at $15,180 from $15,225 and nickel was at $16,200 from $16,300.
“The metal prices are, in our view, susceptible to a sharp price correction, as deteriorating fundamental data is still being masked by financial investors' excessively bullish sentiment,” Commerzbank said in a note.
“Once the market focus shifts to the underlying market fundamentals, the high price levels in base metals, which are not justified, won't last long.”
