London Metal Exchange (LME) copper futures slipped in Asia on Monday due to profit-taking after sharp gains in London, but they were supported by a weaker dollar that prompted solid demand from investors seeking hard assets. Falls in the cash price also undermined the benchmark three-month copper contract, but the red metal was supported by plenty of bullish factors, traders said.
"There are fresh inflows of funds into base metals, with the bearish dollar spurring demand for copper and other metals," said an LME trader at a Japanese trading house.
Traders said hedge funds, which had pulled some funds from oil markets, were heading into commodities, including base and precious metals.
"Copper is fundamentally bullish as there are still supply concerns amid labour strikes and with warehouse stocks constantly dropping, but the market would need more buying factors to chase prices higher," the trader said.
The three-month LME copper futures contract stood at $2,941/$2,949 per tonne against the London kerb close of $2,953 in London on Friday.
Traders said the key copper contract would test $3,000 in the near term, but stiff technical resistance was seen around $2,975.
In Shanghai, the most active January copper futures rose 400 yuan a tonne to 28,390.
On Friday, union workers at El Abram copper mine in Chile, a unit of Phelps Dodge Corp, said they had launched a strike after rejecting the company's final contract offer.
Metals markets closely monitor labour disputes in Chile, the world's top copper producer, because the threat of reduced production looms at a time when tight copper supplies have driven prices to multiyear highs.
The dollar dropped against major currencies, which was also supporting metals.
Lingering concerns about bloated deficits in the United States weighed heavily on the dollar.
The US currency slumped to $1.2973 per euro in Tokyo trading, revisiting a record low touched in New York on Friday despite data showing a surprising increase in the number of new US jobs created in October.
Against the Japanese currency, it stood at 105.37/41 yen after marking the day's low of 105.36 yen in trade.
Other LME metals were steady to slightly lower, although they were well supported, traders said.
Benchmark three-month LME aluminium was quoted at $1,822/$1,827 per tonne against $1,826 in London.
January Shanghai aluminium futures fell 60 yuan to 15,900 yuan.
Three-month nickel futures on LME stood at $14,200/$14,400 per tonne, little changed from $14,350 in London.
LME tin futures were quoted at $9,100/$9,200 per tonne against $9,150 in London.
LME zinc was at $1,095/$1,100 per tonne against $1,099 on Friday. Lead futures were steady at $927/$932 against $928 in London.
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