Copper moves higher

Copper rose on Tuesday as the dollar slipped against the euro and inventories fell, while lingering worries about supplies from top producer Chile helped underpin sentiment. Benchmark copper for three-months delivery on the London Metal Exchange ended at $7,400 a tonne from $7,310 at the close on Monday when the metal used in power and construction hit a two-week low of $7,270 a tonne.
The dollar fell on expectations the US Federal Reserve would repeat a pledge to keep interest rates very low for a long time, making commodities priced in dollars cheaper for holders of other currencies. "It's a rebound on the back of the euro bounce," said Andrey Kryuchenkov, analyst at VTB Capital. "But we need to wait and see what happens in the second quarter, see if the Chinese come back to the market."
The second quarter of the year is traditionally the strongest for metals demand. Analysts will be watching Chinese import data for signs that the country, the world's largest copper consumer, was back in the market looking for material. Traders said the promise of low US interest rates for some time could also help accelerate economic activity in the United States, the world's largest economy, and push up metals demand.
Also boosting sentiment in industrial metals were stocks of copper in London Metal Exchange warehouses, down more than 24,000 tonnes since March 1 to 528,050 tonnes - the lowest since the middle of January. Analysts said the market was also worried about supplies from Chile, where power supply could become a problem after a devastating earthquake hit the country in late February.
That concern was reinforced by a magnitude 6.7 aftershock off Chile's coast on Monday. "There are lingering worries about more power interruptions in Chile," said RBS metals analyst Stephen Briggs. "The market is concerned that power blackouts may be repeated, if you go on having them they (will) have some sort of effect."
But capping base metals prices so far this year were ongoing worries about a slow recovery in Western demand and expectations that China would tighten policy to cool inflationary pressures created by red-hot growth. Aluminium ended at $2,258 a tonne from $2,227, tin was untraded at the close, but bid at $17,550 a tonne from Monday's last bid at $17,410. Nickel's last bid was $21,875 a tonne from $21,500. Zinc touched $2,261, its lowest since in more than a week. It closed at $2,307 from Monday's last bid at $2,279.5. Battery material lead closed at $2,220 from $2,203.