METALS-Copper falls as short covering fades

Updates prices

By Polina Devitt

LONDON, Feb 17 (Reuters) - Copper prices fell on Monday after investors and traders finished rolling forward positions ahead of a contract expiry this week.

Three-month copper on the London Metal Exchange (LME) CMCU3 was down 0.6% at $9,420.50 a metric ton by 1710 GMT after breaking below its 200-day moving average. The contract hit its strongest in three months on Friday at $9,684.50.

Traders scrambled to cover short positions on Friday ahead of the expiry of contracts on Wednesday, pushing up LME copper and triggering a sharp move in a key spread.

Much of the activity on Friday was rolling positions forward from the expiring February contract to March, traders said.

"After the manic Feb/March rolls on Friday, the market calmed down," said Robert Montefusco at broker Sucden Financial.

The spread between the cash LME copper contract and benchmark three-month futures CMCU0-3 spiked to a premium on Friday for the first time in 19 months, surging to as much as $249 a ton. On Monday it flipped to a discount of $75.

LME benchmark aluminium CMAL3 rose 0.5% to $2,650.50 a ton, while the spread between cash and the three-month contract was last at a premium of $38 per ton, its highest since May, 2023, compared to $6 a week ago.

Worries that U.S. President Donald Trump may impose tariffs on copper has inflated Comex copper futures in recent months, with the premium of the U.S. May contract HGK25 over LME at around $840 per ton on Monday, down from a record peak above $1,100 last week.

Trump on Friday kept alive his drumbeat of tariff threats, saying levies on cars would be coming as soon as April 2.

The broader markets were monitoring developments around U.S. efforts aimed at ending Moscow's nearly three-year war in Ukraine. Russia is a major producer of aluminium, nickel and copper. The LME banned supplies of Russian metals made after April, 2024 to its system last year.

Senior U.S. and Russian officials will meet in Saudi Arabia on Tuesday. The highest-level in-person discussions between the nations in years are meant to precede a meeting between Trump and Russian President Vladimir Putin.

Among other metals, zinc CMZN3 rose 1.2% to $2,875.50, lead CMPB3 added 0.5% to $1,992.50, tin CMSN3 gained 0.2% to $32,605, and nickel CMNI3 climbed 0.2% to $15,505.

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