Copper Up as Speculative Clearout Makes Way for New Gains

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LONDON, March 10 Reuters Copper prices rose on Wednesday as traders hoped a pullback from tenyear highs had run its course and that the metals spectacular rally would resume.

Strong demand from China and expectations of yearslong 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 isnt a form of renewable energy that doesnt 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 clearout, Marexs Alastair Munro said…

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