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Copper prices soared to two-year highs on Monday, driven by supply concerns highlighted by BHP Group's bid for Anglo American, though signs of sluggish demand in top consumer China kept prices short of a record peak.
Benchmark copper on the London Metal Exchange (LME) traded 0.7% up at $10,040 a metric ton in official rings from an earlier peak of $10,055 a ton, close to the record high of $10,845 hit in March 2022.
Traders said sentiment was boosted by Chinese property developer CIFI Holdings agreeing a restructuring plan with bondholders. The slowdown in China's property and construction sectors have weighed on base metals markets.
A BHP and Anglo American tie-up would create an entity that controls 10% of global copper supplies, surpassing Chile's Codelco and Freeport-McMoRan.
"It (the bid) shows how valuable copper is going to be for miners. People are thinking demand is going to grow fast," one copper trader said. "But unless Chinese demand shows strong recovery there will be a pullback."
Copper has been boosted by markets anticipating tight supplies and growing demand from energy transition applications such as electric vehicles as well as new technology such as artificial intelligence and automation.
Weak Chinese demand can be seen in copper stocks in warehouses monitored by the Shanghai Futures Exchange, which are close to four-year highs after rising above 287,000 tons from around 33,000 tons at the start of this yeare .
"In China, copper inventories remain elevated while premia for imported metal in China has sunk to zero," ING analysts wrote.
The Yangshan premium assessed by SMM has dropped to zero for the first time on record, indicating weak appetite to import copper into China.
Elsewhere, the market is awaiting the outcome of this week's U.S. central bank meeting, with forecasters expecting interest rates to be kept on hold.
A softer dollar was supporting industrial metals overall on Monday, traders said.
Aluminium slipped by 0.1% to $2,567 a ton, zinc gained 1.8% to $2,896, lead was 0.1% firmer at $2,210, tin was up 0.3% at $32,500 and nickel advanced 1.1% to $19,320.
(Reporting by Pratima Desai Editing by David Goodman)