(Bloomberg) -- Copper’s barnstorming run is showing signs of cooling, one day after reaching an all-time high, with investors cautioning its rally may have been running ahead of weak fundamentals for refined metal. 

Three-month copper futures are slightly higher than Monday’s close, having hit a record earlier that day — the latest high-water mark in a months-long rally driven by financial investors betting on deepening supply shortages.

Many participants in the physical trade have been warning that prices were running ahead of signals of underlying market conditions. Demand remains relatively tepid — especially in top buyer China, where inventory levels remain high and suppliers of copper wires and bars have been cutting output. 

China’s economic struggles remain in the spotlight, with fresh data showing there’s little sign of a turnaround in its debt-plagued property industry. The ailing sector has been a major drag on consumption in the top metals-consuming country.

Tuesday’s steadying came after banks, miners and investment funds have been touting copper’s bright long-term prospects. A flood of investment into the market over the past few weeks had piled pressure on bearish traders, who’ve taken a more cautious stance owing to weak spot demand, particularly in China. 

The metal’s rally went into overdrive last week as a short squeeze on the New York futures market triggered a global rush to secure the metal. The spread between front months has since eased. 

Read More: Copper Short Squeeze in New York Is Rocking Metals Markets 

While the Comex short squeeze may continue, there were risks of a rapid retreat in copper once funds exited or made delivery, Guangzhou Futures Co. said in a note. The broker cautioned investors against chasing the rally.

Copper traded 0.2% higher at $10,906.00 a ton on the London Metal Exchange as of 3:30 p.m. London time, the spread between LME’s cash and three month copper contracts has again traded out to a $115 per ton contango. Other base metals were mixed, with tin declining and aluminum up 4.5% to $2,749.50 a ton on the back of more supply chain disruptions.

Alumina futures rose by as much as 7% in Shanghai after Bloomberg reported that producer Rio Tinto had declared force majeure on supply of alumina cargoes from its refineries in Queensland, Australia. 

Meanwhile a further 81,500 tons of aluminum have been canceled out of LME warehouses in Asia.

--With assistance from Guillermo Molero.

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