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Copper prices are close to a 14-month peak

[miningmx.com] -- Copper prices were steady on Thursday after rising to close to a 14-month peak, underpinned by persistent dollar weakness, upbeat sentiment and bets from funds on further price gains.

"Copper should tumble to try to find new support but at the moment it's very bullish. We're in the grip of fund buying, they seem to have the control of the market at the moment," said a London-based trader.

With the impact of Dubai's shock debt announcement last week seemingly largely contained, investors were free to focus on the eighth straight decline in U.S. job losses in November, and a bullish outlook by the Federal Reserve.

Copper has risen more than 130 percent this year and is on track for its biggest annual increase since at least 1978. But it remains far off a record $8,940 struck in July last year, before the collapse of global markets in the last quarter.

Investors are betting big on metals amid expectations a mending global economy will boost demand. To date, however, demand from industry has not materialised, with copper stocks on LME warehouses standing at the highest since late April.

PRICES

* Three-month copper on the London Metal Exchange was trading at $7,135 a tonne at 0841 GMT compared with $7,125 at the close on Wednesday. It touched a high of $7,166 earlier, near Wednesday's peak of $7,170, the best since late September 2008.

* Aluminium was at $2,158 a tonne from $2,157, having earlier hit $2,166, its highest since late October 2008.

FUNDAMENTALS

* Chinese steel prices continued to rise this week with buyers defying the traditional winter lull, shrugging off dire warnings from the government about overcapacity and a possible slump in demand.

* South African copper producer Palabora Mining Co Ltd. (Palamin) said on Thursday production will drop by 15 percent between November and December due to repair works at one of its copper units.

* World No.1 copper producer Chile sees prices for the red metal staying at "good levels" in coming months despite high inventories as investors bet big on metals, Mining Minister Santiago Gonzalez said on Wednesday.

* Two-thirds of Europe's primary aluminium smelters might shut in the near future, because they are struggling with high costs, the European Aluminium Association said on Wednesday.