Copper looks cheap after big losses

Copper rose by more than $100 a tonne on Thursday after sharp losses in the week left the metal looking cheap in the face of a declining supply surplus.
Copper for delivery in three months on the London Metal Exchange cost $7,145 a tonne versus $7,030 at the last London close, when the contract lost $310, or 4.2 percent of its value.
"Copper looks cheap near $7,000," a trader said. Commodity-specific investment funds in the first half of the year bought up copper on forecasts of strong demand and limited supply, driving prices as high as $8,800 a tonne by May double the price in January only to stage steady exits from the market in favour of profits over the last several months.
Copper prices have been in near-steady decline since July. "The professional money appears to be switching out of copper into aluminium," BNP Paribas commodities analyst David Thurtell said in a report. Traders said below around $7,200 a tonne copper could attract wide buying interest, particularly given dwindling supplies of the metal. The latest inventory data shows LME warehouse stocks totalling only 116,975 tonnes, which is less than three days worth of global usage.
"From a support standpoint, $7,170 is an important level," a trader said. However, trading was light across Asia due to a weeklong holiday in China that has idled the Shanghai Futures Exchange. Copper for December delivery on the New York Mercantile Exchange's Comex division was up 3.95 cents to $3.3245 a lb.
US crude oil futures ended sharply higher on Wednesday after two days of heavy losses, underpinning positive sentiment across commodities markets, traders said. Three-month aluminium was up $17 to $2,492 a tonne. Dealers said the metal, widely used in construction and aerospace, was finding some support on modest declines in inventories held in London Metal Exchange warehouses, which were 13 percent below the 52-week high of 793,625 tonnes.
Three-month zinc was $20 higher at $3,325 a tonne. Among untraded contracts, three-month nickel was indicated at $28,200 a tonne and three-month lead at $1,380 a tonne.