Copper eases

Copper eased on Monday, after touching a more than two-year peak in the previous session, as the dollar extended gains against the euro following better than expected US home sales data in the world's largest economy. Benchmark copper for three-months delivery on London Metal Exchange ended at $8,064 a tonne from a close of $8,095 on Friday, when it hit a 26-month peak of $8,178.
-- LME copper stocks record surprise increase
"The dollar has risen a lot and that's really hurt base metals today ... Dollar tracking continues," David Thurtell at Citigroup said. "(The data) wasn't disastrous, it wasn't phenomenal either." Pending sales of previously owned US homes rose to a four-month high, indicating the housing market was regaining some stability after recent steep declines.
Other data showed new orders received by US factories fell by 0.5 percent in August, resuming a downtrend as demand for transportation equipment fell sharply, according to a Commerce Department report.
The dollar recovered from early declines as renewed concerns about the stability of the eurozone overshadowed worries the Federal Reserve may further ease US monetary policy. A stronger dollar makes dollar-priced metals costly for European investors.
Copper rose on Friday after strong manufacturing data from China reinforced a healthier demand outlook from the world's largest consumer of industrial metals. "Copper has a lot going for it. The supply dynamic is supportive, but I think people are underestimating the demand from reconstruction projects after recent disasters too," said Jonathan Barratt, managing director of Commodity Broking Services, while on a visit to Singapore.
Backing this view, the International Copper Study Group raised its 2011 deficit forecast for the global refined copper market to 400,000 tonnes from an April estimate of a 240,000 tonne surplus. Market balances in copper have been tightening for many months now, with stocks in LME warehouses tumbling more than 30 percent since the middle of February, while Shanghai inventories have halved to 87,447 tonnes since early February.
Denting sentiment a touch, the latest data showed LME stocks edged up 650 tonnes to 374,450 tonnes, while material set to leave warehouses fell below 5 percent of total stock for the first time in four months. Among other metals, battery material lead ended at $2,277 versus Friday's close of $2,295. "We've seen some significant stock rises," Citigroup's Thurtell said. The latest data showed lead stocks up 3,475 tonnes to a 10-year high of 197,850 tonnes.
Aluminium ended at $2,363 versus Friday's close of $2,360. Stainless steel ingredient nickel ended at $24,140 versus $23,800. Tin closed at $25,200 versus $24,900. Concern about supplies in the near term have pushed the metal into a $7 a tonne backwardation - premium for cash material over the three-month contract - compared with a discount of $36 a tonne in early September.
Potential worries about the availability of tin in LME warehouses have also emerged, with two entities controlling 30-40 percent of cash warrants on LME stocks. "There's tightness in tin supply; premiums for tin warrants are increasing steadily. It doesn't surprise me that spreads are tightening if you add into the mix the fact that there's one or two large positions," said Steve Hardcastle, head of client services at Sucden Financial. Zinc closed at $2,230 from $2,229.