Copper breaks $6000 a ton
London Metal Exchange benchmark three-month copper broke key level $6,000 a metric ton Tuesday, building on overnight momentum after Grupo Mexico SA declared force majeure, attracting more fund and speculative interest, an analyst said.
LME copper peaked at $6,005/ton, the latest in a series of record highs. Copper has risen more than 11% since the beginning of April and 26% since the beginning of the year. Prices then dipped to $5,915/ton on profit taking, a move anticipated by most analysts.
"The uptrend is likely to remain intact but after the hard and fast push up we could see some consolidation. The $6,000/ton level is likely to provide some resistance in the near-term," Barclays Capital analyst Ingrid Sternby said. News of Grupo Mexico declaring force majeure due to a three-week long strike at its La Caridad mine fueled copper's latest push up, channelling further fund and speculative money to the metals market, she added.
La Caridad copper mine, in the northwestern state of Sonora, produces about 150,000 metric tons of copper concentrate a year and 250,000 tons of different refined copper products.
Future pullbacks in copper will likely see buying on the dips while fund long position holders will seek to keep prices up, Calyon analyst Maqsood Ahmed said.
The Easter period could also see some profit taking in order to square positions before the four-day weekend, he said.
LME three-month zinc moved to a fresh record high of $2,985/ton, up 2.5% in line with copper's rise and on its own bullish fundamentals, brushing close to key target of $3,000/ton.
Zinc's cash-to-three-month backwardation moves sharply out to $45 from $15.50. Backwardation is a condition where spot prices trade above dates further forward and usually indicate that a market is in short supply.
LME nickel maintained Monday's strong gains to a two-year of $17,650/ton overnight and last traded at $17,450/ton.
Copper's move comes amid buoyant commodities prices with oil at eight month highs and gold pushing through key psychological level of $600 a troy ounce overnight.