Copper steadies

Copper prices recouped earlier losses on Wednesday after slightly better-than-expected data on economic growth in the United States. Copper for delivery in three months on the London Metal Exchange ended the official open outcry session at $8,540 per tonne, level with Tuesday when it dropped 1.3 percent, but up from an intraday low of $8,465.
"The headline numbers were a little bit better than expected, which may have given copper some temporary strength, but it doesn't change the basic story that the US economy is slowing down," Sempra Metals economist John Kemp said. Edward Meir, analyst at brokerage MF Global, said the dollar could rise and put pressure on commodities if the Fed left rates unchanged.
"Even if the Fed were to cut rates by 25 basis points (as is the majority view), we still could see the dollar rally if the accompanying policy statement suggests that the downward move will be the last for a while," Meir said. Tight stocks in LME warehouses and concerns about future supply due to strikes in Chile and Mexico supported prices.
LME stocks stand at levels last seen in August 2007 at 110,525 tonnes, down 44 percent since the start of the year. Reflecting the tight market, the backwardation - the extra money paid for cash metal over the three-months price - has widened to around $140 per tonne, from a discount of around $40 at the start of this year.
The backwardation is up nearly 40 percent in just a week and it could widen further, traders said. "The low inventory levels have pushed out the backwardation - it is all because of supply concerns," an LME trader said. Copper inventories monitored by the Shanghai Futures Exchange fell 6 percent to 46,473 tonnes in the week ended Tuesday. The Shanghai market will close on Thursday, May 1 and resume trading on Monday, May 5.
Copper prices were supported after Chile's Escondida, the world's largest copper mine, said its first-quarter output fell 13.4 percent from a year earlier to 334,652 tonnes, citing lower ore grades.
"The data out of Chile is very positive for copper," Standard Chartered's Smith said. Strikes at Chile's Codelco, the world's leading copper producer, and Grupo Mexico's giant Cananea mine gave copper prices a floor and reminded investors about the tight concentrate market. Three-months aluminium shed $57 to $2,907 a tonne, zinc was at $2,230 against $2,239/2,240 and lead edged down $21 to $2,714. Tin fell to $23,200 against $23,705/23,710, while nickel was down $150 to $28,500 per tonne.