LME copper hits $6,200 as China traders return

Copper prices touched the psychologically important $6,200 levels on the London Metal Exchange (LME) in early trades on Friday on anticipation of a spurt in demand since Chinese traders returned after a week-long holiday. Optimism over the growth of leading consumer economies to fuelled the rise.

"Copper is rising as the overall sentiment on LME is bullish," an official of a leading primary copper producer said. However, such a high price is not sustainable, he said.

Players, who had diverted to other commodities from metals, also returned as they found the new avenues unattractive. But, despite strong fundamentals, copper is likely to decline to $5,000, which is also higher as far as the cost of production - at $3000 per tonne - is concerned, the official said.

On the domestic front, secondary copper traders, panic-stricken after searches by excise and I-T officials, restricted their deals to need-based ones, unlike the earlier profit-based transactions, resulting in a tightness in supply.

"All secondary copper traders, who deal in cash, would have to approach primary copper producers, such as Hindustan Copper, Birla Copper and Sterlite. The traders may face fund problem initially but surely will settle once they start dealing," he added.

Economists are of the opinion that China's economic growth will continue. Copper has rose 7.5 per cent since February 20, driving other commodities higher.

Copper inventory is swelling with fresh way-in being witnessed from major producing nations, including Chile.

Aluminium, too, followed copper with price touching $2,862 a tonne on Friday as against $2,807 in late Thursday trades in London. Nickel soared to $42,900 a tonne while zinc perked up to $3,524 a tonne.

Sentiment is likely to remain bullish as investors have found base metals as safe heaven for investments. But, within a fortnight volatility may pull red metal price back to $5,000 levels.

Prices of lead and tin also increased with prices crossing $1,905 and $13,450 per tonne, respectively. Tin demand is rising owing to the Indonesian government's crackdown on illegal mining.