Copper peaks as supply concerns outweigh dollar strength

Copper prices peaked on Wednesday as global supply concerns and mounting geopolitical risks outweighed pressure from a stronger dollar. The most-traded copper contract on the Shanghai Futures Exchange closed daytime trade 0.85% higher at 104,120 yuan ($14,931.88) per metric ton after hitting an all-time high at 105,650 yuan earlier in the session. Benchmark three-month copper on the London Metal Exchange advanced 0.58% to $13,240 per ton by 0743 GMT, after touching a record $13,407 earlier. Copper's price strength has been underpinned by disruptions at mines, worries about deficits this year and a flow of the red metal to the U.S. ahead of potential tariffs that are tightening supply elsewhere. U.S. President Donald Trump on Tuesday urged Iranians to keep protesting, saying help is on the way. That stoked concerns over geopolitical risks, propelling some investors to rush to commodities with healthy fundamentals such as copper and tin, according to analysts.

However, a stronger dollar, which makes commodities priced in the greenback more expensive for buyers using other currencies, capped price gains. Meanwhile, tin prices in both Shanghai and London bourses hit record highs, with gains of 23.6% and 30.4%, respectively, so far in January.

More funds flowed into the tin market with investors betting on rapid growth in demand for the metal used to make semiconductors that benefit from the artificial intelligence boom, said analysts.

SHFE tin surged 8% to hit the upper price limit at 413,170 yuan, while LME tin rallied more than 5% to $52,495. "We do not see any dramatic change in tin's fundamentals; the round of price rally has been powered by speculative trading," said Jing Xiao, an analyst at broker SDIC Futures.

Tin's demand prospects in the AI sector were overestimated while the reduced consumption in traditional users was underestimated, Xiao said.

"High prices have dampened buying appetite from the downstream consumers while supply growth this year will likely beat expectations, pointing to downside risks."

SHFE aluminium nudged down 0.06%, nickel dipped 0.11%, lead ticked down 0.17% and zinc added 0.51%.

Among other LME metals, aluminium shed 0.17%, lead lost 0.29% while zinc rose 0.72% and nickel gained 0.67%.