Changes dateline to London, adds analyst comment, updates prices

LONDON, Jan 7 (Reuters) - Copper eased from a record high on Wednesday as traders assessed whether a breathtaking early-year rally could be sustained, while nickel hit its highest in 19 months on expectations of lower supply from top miner Indonesia.

Benchmark three-month copper CMCU3 on the London Metal Exchange was down 0.7% to $13,144 per metric ton at 1020 GMT, after hitting an all-time high of $13,387.50 on Tuesday.

"Base metals are softer this morning as the bullish momentum that has powered the sector since late December pauses for breath," Neil Welsh, head of metals at Britannia Global Markets, said in a note.

"The market remains heavily driven by positioning and momentum amid lingering supply‑chain risks and macro policy uncertainty in the United States."

Citi on Tuesday raised its first-quarter copper price target to $14,000, citing strong market momentum that has breached both the base and bullish case outlook in its December forecast. However, the bank kept its 2026 average forecast unchanged at $13,000.

"There appears to be a 'fear-of-missing-out' action in the market and quite frankly a frenzy towards copper that we view as unsustainable," Natalie Scott-Gray, senior metals analyst at Stonex, said in a note.

Nickel CMNI3, meanwhile, was up 0.3% at $18,565 a ton, after touching $18,790, its highest since June 5, 2024. The metal used to make stainless steel has gained around 30% since mid-December.

Indonesia's plans to curb production have added a strong supply-risk premium but fundamentals still show a market in surplus, Welsh said.

LME nickel stocks MNISTX-TOTAL climbed to 275,634 tons, the highest since June 2018, after 20,760 tons of inflows, mostly in Kaohsiung, while the cash LME nickel contract was trading at a $175 a ton discount to the three-month forward CMNI0-3, implying no pressing need for near-term metal.

One entity currently holds between 30% and 40% of LME nickel warrants, exchange data show 0#LME-WHT.

Aluminium CMAL3 dropped 0.5% to $3,114.50 a ton, zinc CMZN3 slipped 1% to $3,217.50, lead CMPB3 dipped 0.1% to $2,073 and tin CMSN3 was up 0.4% at $44,655, having hit its highest since March 2022 earlier in the session.

(Reporting by Tom Daly. Additional reporting by Lewis Jackson and Dylan Duan. Editing by Sonia Cheema and Mark Potter)

((Tom.Daly@thomsonreuters.com))