Copper rose on Tuesday after strong US housing and consumer confidence data lifted prospects for rising metals demand in the world's biggest economy, although gains were capped by a stronger dollar and concerns over Chinese growth. Metals prices got a shot in the arm after US single-family home prices rose in March by the most in seven years and consumer confidence climbed in May to the highest level in more than five years.
"We were struggling a bit most of the morning and the weaker euro didn't help, but it got a boost when those US figures came through. It looks like investment buying; the trade are very quiet at the moment," a London trader said. --- Restart of Indonesian, Indian mine could drag on prices
Benchmark copper on the London Metal Exchange closed 0.32 percent higher at $7,322 a tonne, paring gains after touching a session peak of $7,379. LME copper was mostly steady last week, but looks set to end the month with gains of more than 3 percent, its first monthly advance since January.
"We expect copper to continue moving around current levels as dips will attract consumer buying so the downside should be pretty limited. But the upside is also limited as caution over growth out of China will prompt some selling at higher prices," Societe Generale analyst Robin Bhar said. "Comments from Chinese officials have also been accentuating expectations of slower growth."
Fuelling investor concern, China's factory activity shrank for the first time in seven months in May, data showed last week, reigniting worries over stuttering growth there. An official report is due on June 1. Comments from officials on Monday also signalled that the country, which accounts for around 40 percent of refined copper demand, is willing to tolerate slower growth.
A stronger dollar against a basket of currencies was weighing on dollar-priced commodities such as metals, making them more expensive for buyers in other countries. Helping to firm sentiment, however, European Central Bank Executive Board member Joerg Asmussen said on Monday the bank will stick to its expansive monetary policy for as long as necessary.
In supply news, Freeport McMoRan Copper & Gold Inc is allowed to re-start most of its production at its Papua copper mine, a mining ministry official said on Tuesday, two weeks after a tunnel collapse killed 28 people. A resumption of mining operations at the giant Grasberg mine in Indonesia, could erode support for copper prices, analysts said.
Putting further pressure on copper prices, Hindalco Industries Ltd, India's No 2 copper producer, will also reopen its Birla smelter in early June after a month-long shutdown. Battery material lead was the best performer on the LME, gaining 2.4 percent to close at $2,119 a tonne.
"Tightness in the metal's nearby forward structure continues to be a feature of the market and may well be deterring any would-be shorts from stepping in too aggressively to try and cap the rally," said analyst Leon Westgate at Standard Bank in London. The premium of three-month lead over cash metal has shrunk to $1.50 a tonne from $19.50 at the start of the month, indicating increasing scarcity for nearby metal.
Tin inventories on the LME fell by another 1,825 tonnes to 230,725 tonnes on Tuesday, bringing the decline in stocks this year to 27 percent. Aluminium finished 0.68 percent stronger at $1,852.50 per tonne, zinc climbed 0.84 percent to end at $1,871, tin rose 0.36 percent to $21,125 and nickel closed 0.34 percent firmer at $14,875.
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