Copper slips on profit-taking after scaling fresh record high

London: Copper prices retreated on Friday following a fresh record high on Thursday, as traders debated whether the metal’s September surge has become excessively inflated after five consecutive days of gains fueled by worries over dwindling inventories outside the United States. The three-month copper price on the London Metal Exchange slipped 0.2% to $14,743 per metric ton by 0937 GMT, after peaking at $14,875 earlier in the day.

Copper, a key component in power and construction, has surged 19% this year as demand surged ahead of possible tariffs on refined copper imports, raising concerns about the availability of the metal in traditional consuming regions. Ole Hansen, head of commodity strategy at Saxo Bank, suggested the market may be experiencing a disconnect between short-term and long-term drivers, which could increase the risk of a pullback as some of the near-term bullish forces begin to wane.

The narrowing premium of COMEX copper over the global benchmark and reduced daily inflows into COMEX warehouses, where stocks now stand at 696,259 tons, further underscored the potential for profit-taking. However, some indicators suggest the rally may be susceptible to profit-taking: copper's Relative Strength Index has been above 70 since Tuesday, indicating overbought conditions.

The premium of the LME cash contract over the three-month benchmark has narrowed to $41 a ton from $436 in mid-August, indicating a less acute physical tightness. Despite these signs, Hansen maintained that any correction would likely not undermine the long-term bull market driven by constrained mine supply and expectations of demand from AI data centers, electrification, and the energy transition.

Among other LME metals, aluminum fell 0.3% to $3,346 per ton, while the cash LME contract's premium over the benchmark rose to $16 per ton, up from a $5 discount two weeks ago, suggesting tighter nearby supply. Zinc declined 1.2% to $4,002, lead slipped 0.1% to $1,913, tin rose 0.2% to $55,350, and nickel fell 0.2% to $16,855.