METALS-Copper, nickel retreat from highs as rally loses steam

LONDON, Jan 7 (Reuters) - Copper fell sharply on Wednesday from a record high the previous session, while nickel tumbled from a 19-month peak as an early-year rally in industrial metals lost momentum.

Benchmark three-month copper CMCU3 on the London Metal Exchange dropped as much as 3.1% to $12,833 per metric ton and was trading down 2.5% at $12,905 at 1706 GMT. It hit an all-time high of $13,387.50 on Tuesday on concerns over tight mine supply.

"Base metals are softer... as the bullish momentum that has powered the sector since late December pauses for breath," Neil Welsh, head of metals at Britannia Global Markets, said in a note.

"The market remains heavily driven by positioning and momentum amid lingering supply‑chain risks and macro policy uncertainty in the United States."

Citi on Tuesday raised its first-quarter copper price target to $14,000 but kept its 2026 average forecast at $13,000.

"There appears to be a ... frenzy towards copper that we view as unsustainable," Natalie Scott-Gray, senior metals analyst at Stonex, said in a note.

Nickel CMNI3 was down 3.7% at $17,835 a ton. It plunged as much as 4.1% - the biggest intraday drop since April last year - to $17,760 after touching $18,800 earlier in the session, its highest since June 2024.

Top producer Indonesia's plans to curb nickel ore output have added a strong supply-risk premium but fundamentals still show a market in surplus, Welsh said. Analysts say it is likely the Indonesian government will have to backtrack on quota reductions.

LME nickel stocks MNISTX-TOTAL climbed to 275,634 tons, the highest since June 2018, after 20,760 tons of inflows, mostly in Kaohsiung, while the cash LME nickel contract was at a $175 a ton discount to the three-month forward CMNI0-3, implying no pressing need for near-term metal.

One entity currently holds between 30% and 40% of LME nickel warrants, exchange data show 0#LME-WHT.

Aluminium CMAL3 dropped 1% to $3,096.50, zinc CMZN3 slipped 2.3% to $3,174, lead CMPB3 lost 0.8% to $2,058.50, while tin CMSN3 was up 0.2% to $44,370, having earlier hit its highest since March 2022.