The London Metal Exchange (LME) copper finished sideways on Tuesday after recovering by about $100 from last week's low. Concerns about supply cannot stop investors from selling.
One trader said, "There are some fund sales at various times, but there is a solid support around US$3,570 per ton."
Three-month copper
It rose to US$3,635/ton, but it dropped by US$20 to 3,585 in the evening session.
Another trader said, "I think the overall base metal trend has indicated that last week's downtrend was only a minor correction, giving people a chance to buy. Those investors who haven't bought up have already regretted it."
After the copper fell last week, market traders covered up short positions to attract investment funds and speculators to return to the market.
"The copper will not really abandon the rally...this market is difficult to sell short," said an investment fund source.
**Supply is still a problem**
Copper prices rose by about 30% last year, hitting a record high of $3,725 this month, as the global supply of copper is difficult to meet the demand of buyers headed by China.
But GFMS, a metals industry consulting company, predicts that the recent storms in the southern United States have had a limited impact on the market.
"The rebuilding of New Orleans and the construction of houses for the victims of the nationwide will undoubtedly increase the consumption of basic metals, but the increased use of scrap will have little effect on the demand for primary metals."
However, supply is still a problem.
LME copper inventories rose by 4,250 tons to 75,100 tons, nearly three times the 31-year low of 25,525 tons, but they are still at historically low levels.
**Good news from manufacturers**
Good news came from major producers on Tuesday. Antofagasta expects strong future demand. Rio Tinto said that net profit will almost double this year due to strong demand, especially from China.
Other metals are trading quietly.
Three-month aluminum has risen to 1,863 from the previous day's quotations of 1,859 US dollars. The zinc fell from 1,419 to 1,402 US dollars.
Lead fell from 871 to 866. Nickel slipped from 14,525 to 14,325.
Tin decreased from 6,875 to 6,700.