London 09/11/2016 - Copper is on track for a record trading day on the LME on Wednesday November 9 while with nickel volumes have already hit an all-time high.
Three-month copper trading volume was 52,514 lots by the kerb close, just shy of the previous record of 53,042 lots hit by the 19:00 close of Select on January 14, 2015, according to Bloomberg data. At that time, Chinese hedge fund Shanghai Chaos was reportedly shorting the market.
Trading volume in the three-month nickel contract reached 22,364 lots by the kerb close, surpassing the previous all-time high of 19,052 lots from July 5, 2016 - the nickel price hit a nine-month high on that day after Philippine president Rodrigo Duterte promised a "comprehensive review" of mining concessions.
"Trading has gone through the roof. Regardless of what you think of Trump, the volatility is good for brokers. There has been plenty of technical buying going through on these price moves," a trader said.
The three-month LME copper price hit its strongest since June 2015 today at $5,443 per tonne while three-month nickel hit a fresh 2016 high of $11,660 per tonne.
Both contracts have since pared some of those gains but remain comfortably in positive territory. Three-month copper recently traded at $5,389 per tonne, up $154 on Tuesday's close, while the three-month nickel price recently traded at $11,575 per tonne, an increase of $315.
The run-up in price surprised many market participants who had expected prices to decline after Donald Trump pulled off a stunning victory in the race for US presidency.
But Trump's promise to spend massively to overhaul the country's crumbling transport, telecommunications, water supply and electricity systems will boost demand for metals, market observers said.
"We were not expecting the moves higher. But we were also not expecting Trump to be elected. Maybe now a decision has been reached, some of that uncertainty has gone and you can draw a line in the sand," an LME floor trader said.
Still, higher copper prices are at odds with the metal's fundamental backdrop and a correction may ensue, traders said, particularly if investors decide to take profits.
"The [copper] price should not be up here but the funds, CTAs and high-frequency traders have driven it higher. How the metal closes today will be key," an LME floor trader said.
As well as trend-following algorithmic trading, a massive increase of net long positions in copper on the LME last week to their highest in one-and-a-half years has also been a driver
A break above $5,443 could trigger a fresh round of short-covering in the metal, which would propel prices higher still, market observers warned.
Nickel's stronger fundamental backdrop may keep prices supported at elevated levels. Indonesia has played down the possibility of an easing of its mineral export ban and Philippine nickel production is likely to decline this year due to its mining clampdown as well as heavy rains in the country that have hampered mining operations and shipments of material.
But high nickel stocks, the likelihood that supply of nickel ores and NPI will rise from next year and softer end-use markets highlight the fragility of the nickel's rebound.
(Editing by Mark Shaw)