(LME) copper futures on the London Metal Exchange fell slightly on Tuesday as speculators took profits after a recent rally at a time when the energy market generally fell. Zinc futures, on the other hand, fell sharply by more than 5 per cent, dragged down by a sharp increase in inventories.
17:00 London time (00:00 Beijing time)), LME copper for three-month delivery fell 0.46 per cent, or $46.50, to $10149.50 a tonne, after rising 2 per cent earlier to hit $10402.50 a tonne.
LME copper prices jumped 15 per cent in less than two weeks, closer to the record high of $10747.50 set in may.
Industrial metal users are trying to buy raw materials as metal inventories fall and some LME base metal smelters suspend production as energy prices rise.
"there seems to be some profit-taking, driven by a slight pullback in the energy market," said Giancldio Torlizzi, a partner at T-Commodity, a consulting firm.
Us natural gas futures fell near four-week lows on Tuesday, with oil prices slightly lower.
"but this correction will not change the overall bullish trend. Climate change policies have changed the rules of the game and increased demand for copper around the world."
Spot copper in LME hit a record high of $1103.50 a tonne on Monday against three-month copper, up from $55 a tonne a week ago, a sign of recent tight inventories. The rally fell back to $740 a tonne on Tuesday.
Analysts say a weaker dollar provides support, making dollar-denominated metals cheaper for holders of other currencies.
A Peruvian community has threatened to block an important mining road used by Minmetals Resources Bombas (Las Bambas) copper mine to further support copper prices.
Peru is the second largest copper producer in the world and, Las Bambas is the fourth largest copper mine in the country.
LME copper registered warehouse receipts fell to just 14150 tonnes on Friday from more than 150000 tonnes a month ago, the lowest level since at least 1998, although it rose to 15225 tonnes on Tuesday.
According to LME data, an entity holds 50% of the total LME registered warehouse receipts.
Commerzbank expects copper prices to average $10000 a tonne in the fourth quarter of 2021 and $9650 a tonne in 2022.
The bank expects aluminium prices to average $3300 a tonne in the fourth quarter of 2021 and $2900 in 2022.
The investment bank said: "the global aluminium market should continue to be tight and aluminium production outside China should also decline because of high energy prices. We expect supply conditions in some metal markets to deteriorate temporarily. So metal prices are likely to remain high or rise further in the coming months. "
Zinc for LME three-month delivery plunged more than 5 per cent to $3508 a tonne after net speculative positions in zinc reached its highest level since 2014, according to estimates by brokerage Marex.
LME zinc stocks rose about 8 per cent to 201700 tonnes after falling 37 per cent since mid-April.
Indonesia is planning to "hit the brakes" on all raw material exports to attract investment in land-based resource processing and create jobs, Indonesian President Joko Widodo said on Tuesday.
Indonesia has banned the export of a variety of raw ores, such as nickel, tin and copper, to encourage downstream industries, including the production of electric car batteries and aluminum.
The government is currently conducting a study on downstream sales of other commodities with the long-term goal of not just selling raw materials, he said.
A new policy is expected next year, he said.
