Copper steadies

Copper steadied on Thursday but analysts saw more downside risk as the dollar held on to gains and inventories rose, while nickel prices were volatile. Copper for delivery in three months on the London Metal Exchange ended at $7,760 a tonne at the close, down $18 from Wednesday when it fell 2.4 percent on dollar strength.
"It (copper) is recovering after being sold for the past couple of days," an LME trader said. In New York, copper for September delivery, ended down 3.30 cents, or 0.93 percent, to $3.5225 a lb on the New York Mercantile Exchange's COMEX division, after dealing in a session range between $3.51 and $3.5805.
Copper, mainly used in wiring and construction, hit a 10-week high of $8,212 on Monday but has lost 5.5 percent since then as a dollar recovery has triggered liquidation.
"The dollar remains slightly stronger and this could undermine sentiment for the complex in trading today," analyst Michael Jansen at J.P. Morgan said in a research note. The dollar clung on to gains made on Wednesday against the euro, steady at $1.3727, after a sharp rebound from this week's record lows.
But it dropped to nearly three-month lows against the yen later in the session after US new home sales came in below expectations adding to fears about US credit market problems. Rising copper inventories also took away support from the market. Copper stocks in LME warehouses added 1,800 to 100,800 tonnes, just above two days of global consumption. London-listed miners like Rio Tinto, Anglo American and BHP Billiton fell over 4 percent.
Nickel was softer at $30,950 versus $31,400 on Wednesday and traders saw selling pressure as more stainless steel producers signal production cutbacks are set to continue. "There has been substantial deterioration in nickel demand," economist John Kemp at Sempra Metals said. Finnish stainless steel group Outokumpu said it would continue to cut output of standard grade stainless steel products July-September but expected the market to normalise in the last quarter at the latest. The metal, a key ingredient of stainless steel industry, has lost some 40 percent since early May, when it hit an all-time high of $51,800 a tonne.
Lead edged down to $3,080 versus $3,175 Wednesday when it fell more than 6 percent. The metal, consumed by the battery industry, has gained more than 100 percent since the start of the year to hit an all-time high of $3,500 on Friday last week. Aluminium was $33 softer at $2,737. Aluminium stocks at Western world smelters fell to 2.799 million tonnes in June from 2.889 million in May, the International Aluminium Institute (IAI) said.
"Primary aluminium production growth remains strong but this is matched by robust demand growth and the market is likely to be roughly balanced this year," UBS's Robin Bhar said in a note.
Zinc fell to $3,495 against $3,635. It shrugged off the potential impact of Anglo American's Black Mountain zinc and copper production unit in South Africa being hit by prolonged industrial action. Tin ended up at $15,495/15,500 versus $15,250.