Copper Hits 3-Year High as Speculators Pile Into Market

Copper hit a three-year high and nickel touched its strongest in eight months on Tuesday as mostly technical signals prompted speculators and funds to pour more cash into base metals.

The buying took place against backdrop of strong results for mining firms and talk of shortages in some metals, but analysts said there was nothing new to justify the rich prices, Reuters reported.

“There’s nothing really fundamental to drive things onwards from here, so I think it’s a bit of misplaced euphoria and trend-following buyers jumping on the bandwagon,” said Robin Bhar, head of metals research at Societe Generale in London.

“Admittedly the charts have seen some good upside breaks on copper, zinc and aluminum, but I think things are slightly overextended here so there should be correction to where we broke out—around $6,500 on copper and just below $3,000 on zinc.”

Nickel and zinc, both mainly used in steel production, benefited as Asian ferrous prices extended gains with Chinese iron ore futures surging nearly 5% to five-month highs.

Copper: Benchmark copper on the London Metal Exchange struck $6,642.50 a ton, the highest since November 2014, before paring gains to $6,612 by 1034 GMT, a gain of 0.4%. It rose 1.5% in the previous session.

“Copper turnover has picked up since the London AM began on the back of a CTA (Commodity Trading Advisor) bid,” Alastair Munro at broker Marex Spectron said in a note. CTA funds often use computer systems to generate buy and sell signals based on technical signals.

Chilean miner Antofagasta said it had a favorable outlook on the copper price as it more than tripled its interim dividend on Tuesday after a rally in copper prices boosted first-half earnings.

Nickel: LME three-month nickel gained 1.3% to $11,460 a ton, the strongest since December after LME inventories fell on Monday.

Nickel Deficit: There was a global deficit of 36,800 tons of refined nickel in the first half of the year, slightly narrower than a deficit of 38,200 tons in the same period of last year, data showed.

Aluminum: LME aluminum dipped 0.2% to $2,076.50 a ton on trade selling after LME data showed on-warrant inventories—those not earmarked for delivery—rose by 16,275 tons, the fifth straight day of increases.

Zinc: LME zinc added 0.7% to $3,147 after prices climbed on Monday to $3,180.50, the highest in nearly a decade as expectations of a large market deficit fueled speculative buying.