METALS-Copper hits record high despite concern about physical demand

By Eric Onstad

LONDON, Jan 14 (Reuters) - Copper prices scaled new heights on Wednesday, helped by persistent demand from speculative funds, though some investors were wary that the high prices could deter buying by industrial users.

Benchmark three-month copper CMCU3 on the London Metal Exchange rose 0.2% to $13,186 per metric ton by 1700 GMT after touching a record high of $13,407.

LME copper has gained 44% over the past 12 months, buoyed by mine disruptions, worries about supply deficits and the flow of metal to the U.S. ahead of potential tariffs that are tightening supply elsewhere.

"With all these concerns about debasement, financial risks and Fed independence, this demand for hard assets is just sensational," said Ole Hansen at Saxo Bank in Copenhagen.

"There's a limit in industrial metals where we hit a wall in terms of potential demand destruction. I just don't know where that level is and whether it's here."

Data showing weak copper imports to top metals consumer China highlighted the reluctance of users of physical copper to buy at high prices.

Looking at technical signals, a close below $13,000 would spur a reaction to the downside, Hansen said.

Copper demand in China seemed stable, with potential stocking ahead of the Lunar New Year holiday, he added.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 closed daytime trade 0.9% up at 104,120 yuan ($14,931.88) a ton after hitting a record 105,650 yuan.

Tin prices in both Shanghai and London hit record peaks and have gained 24% and 32% respectively this month on the potential for the boom in artificial intelligence to continue driving rapid growth in demand for the metal used to make semiconductors.

SHFE tin SSNcv1 surged 8% to hit the upper price limit at 413,170 yuan a ton while LME tin CMSN3 jumped 8.1% to $53,515.

"We do not see any dramatic change in tin's fundamentals. (The) price rally has been powered by speculative trading," said SDIC Futures analyst Jing Xiao.

Tom Langston at the International Tin Association agreed that the supply and demand metrics have not shifted, noting that fund interest for LME tin was at record levels.

In other metals, LME aluminium CMAL3 slipped 0.4% to $3,184 a ton after touching its highest since April 2022 at $3,225. Zinc CMZN3 gained 2.4% to $3,277 and lead CMPB3 was up 0.8% at $2,077.50 while nickel CMNI3 jumped 5.7% to $18,685 after touching its strongest since June 2024 at $18,905.

($1 = 6.9730 yuan)