Copper prices rallied on Tuesday as a weaker dollar made the metal cheaper for non-US investors, but analysts said demand from top consumer China was quiet ahead of the country's new year holiday. Benchmark copper on the London Metal Exchange closed at $6,590 a tonne from $6,450 a tonne at the close on Monday. The metal, used in power and construction, earlier hit a session high of $6,643 a tonne.
Industrial metals gained after a news report said eurozone governments have in principle decided to help debt-burdened Greece. Speculation emerged earlier after the market heard news European Central Bank President Jean-Claude Trichet was leaving a meeting of central bankers in Sydney early to attend a European Council meeting on February 11. "There is more optimism over the euro, and that it may recoup some lost ground," said Robin Bhar, an analyst at Credit Agricole.
Most of the rise in copper prices last year was built on strong demand from China, the world's largest consumer of industrial metals. But copper has fallen in recent weeks on investors' fears Chinese demand may cool, as the country signalled it may tighten monetary policy to rein in its fast growth. Analysts said Chinese demand was slower at the moment ahead of the country's week-long New Year holiday, starting February 14.
"China's immediate demand will be muted because they already will have bought to cover their needs for the New Year period," Bhar said. Analysts said they hoped demand from other major economies including the United States and Japan would pick up this year.
Copper prices fell to $6,225 last week, their lowest since October 19 last year and marking a loss of about 20 percent since the year high of $7,796 a tonne on January 7. "In line with our expectations, demand in the world's top consumer of industrial metals is slowing down ahead of Chinese New Year celebrations," VTB Capital said in a note. VTB Capital is, however, optimistic about demand.
Stocks of copper in London Metal Exchange warehouses have retreated in recent days, standing above 541,050 tonnes from 543,525 tonnes on January 29, their highest since February 2009. Copper stocks rose 38,175 tonnes in January compared with 59,400 tonnes in December. Stocks of aluminium, used in transport and packaging, fell 8,250 tonnes to 4.571 million tonnes.
"Stock changes are becoming more supportive," a trader said. "But we'll have to wait till after the Chinese holiday to see how things work out." Aluminium closed at $2,056 a tonne from $2,012. Zinc jumped 5.6 percent to a day's high of $2,135 from $2,022.5, before closing at $2,104. Lead closed at $2,032.5 from $1,965, nickel was at $17,550 from $17,200 and tin was at $15,500 from $15,200.
Comments
Comments are closed.