LONDON, March 10 (Reuters) - Copper prices rose on Wednesday as traders hoped a pullback from ten-year highs had run its course and that the metal’s spectacular rally would resume.
Strong demand from China and expectations of years-long supply shortages encouraged a wave of speculative buying that drove prices to $9,617 on Feb. 25, the highest since 2011.
Fears that a speculative bubble was forming and a spasm of caution on wider markets caused by a spike in U.S. bond yields punctured the rally, but prices have begun to recover from a low of $8,570 last week.
By 1222 GMT, benchmark copper on the London Metal Exchange (LME) was up 1.6% at $8,917.50 a tonne.
“The rally in many ways is justified,” said WisdomTree analyst Nitesh Shah, predicting prices at $10,000 and above.
Copper is used in power and construction. “There isn’t a form of renewable energy that doesn’t require more copper than traditional fossil fuels,” said Shah.
MARKETS: Global share markets rose after a stunning rebound in U.S. tech stocks. The dollar strengthened.
FACTORIES: Strong factory data in China and France pointed to solid demand for metals.
POSITIONING: Speculators have reduced bets on higher metals prices.
The net long position in LME copper fell to 43% of active contracts on Monday from 62% on Feb. 25, brokers Marex Spectron said, while a Chinese brokerage cut a long position worth more than $1 billion by almost 25%.
“Metals can resume their rallies having seen such a big clear-out,” Marex’s Alastair Munro said in a note.
SHFE: Copper prices on the Shanghai Futures Exchange fell as traders fretted about a possible tightening of China’s monetary policy.
CHILE: Workers at Antofagasta’s Los Pelambres copper mine in Chile rejected a contract offer, paving the way for a strike.
PERU: Peru’s copper output could hit a record 2.5 million tonnes in 2021, a government minister said.
TIN: LME tin rose 1.3% to $24,750 a tonne as the premium for cash metal over the three-month contract rose back towards last month's unprecedented highs, suggesting an acute shortage of nearby material.
TIN: LME tin rose 1.3% to $24,750 a tonne as the premium for cash metal over the three-month contract rose back towards last month's unprecedented highs, suggesting an acute shortage of nearby material.
OTHER METALS: Benchmark aluminium was up 0.1% at $2,170.50, zinc fell 0.2% to $2,773, nickel gained 0.4% to $16,140 and lead was 0.9% lower at $1,947.
(Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Jan Harvey)
Source: Reuters