Copper briefly rallied on Wednesday before closing flat after comments by Federal Reserve Chairman Ben Bernanke suggested the United States is considering further easing, while better-than-expected economic data from China buttressed sentiment. Three-month copper on the London Metal Exchange finished at $9,650 a tonne and near the $9,651 close on Tuesday. It earlier rallied back towards last week's two-and-a-half month highs of $9,789.75 a tonne, within 5 percent of record highs from February.
Further easing "would be very bearish for the dollar, constructive for commodities in general because it's going to be more inflationary down the road," analyst Ed Meir of MF Global said. The price of commodities tends to rise when the value of paper currency falls which also increases the allure of the asset class as a hedge for investors.
"But I'd be surprised if they go ahead with something like that... I think we need to give it a bit of time to settle in. Also the Fed governors would all have to agree on it," Meir said. Bernanke said on Wednesday the central bank was ready to ease monetary policy further if the economy weakened and inflation moved lower, suggesting policymakers were actively mulling further stimulus.
The dollar extended losses against the euro to hit a session low on Wednesday after Bernanke's comments. On the macroeconomic front, nagging concerns over sovereign debt contagion in the eurozone added to fears a global soft patch in the second quarter could yet turn into a second recession. China's June refined copper and copper concentrate outputs rose 8.7 percent and 12.7 percent from May, respectively. Coupled with a rebound in June copper imports and reported declines in Chinese bonded and ShFE warehouses, the data pointed to a steady demand for the metal, traders said.
"The Chinese trade figures overnight were better than expected.. and that's prompted the wave of buying that we saw. We popped above $9,700 early this week, came back again, and now we're having another look," said one London trader. In industry news, workers started heading by bus to Freeport McMoRan Copper & Gold's huge Indonesia mine and its port early on Wednesday, providing evidence that an eight-day strike had ended, a Reuters eyewitness said. Australia's No 2 nickel miner Minara Resources trimmed its full-year production guidance by 1,000-8,000 tonnes.
Nickel finished at $23,975 from $23,645 a tonne. Aluminium ended at $2,513 a tonne from $2,491. Shipments of aluminium into the United States rose for a second straight month in May, spiking to a near two-year peak, as a growing domestic market deficit and improved demand conditions drove the builds. Tin closed at $27,400 a tonne from $27,150. Zinc ended at $2,361 from $2,349 a tonne and lead ended at $2,701 from $2,733 a tonne, having reached its highest since mid April at 2,773.
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