Copper rose on Wednesday as the dollar softened and lead rose more than 10 percent on a technical rebound. "The whole commodity complex is higher and the dollar is a bit weaker - so it is just a reaction of the oversold situation in lead," said analyst Eugen Weinberg at Commerzbank.
London Metal Exchange lead rose 11.1 percent to a high of $2,060 - the highest since August 8 - before closing at $2,050. On Tuesday lead, used in batteries, was at $1,855. Prices have fallen by 15 percent this month as the European summer is a traditionally soft period for metals demand.
Copper for delivery in three months rose 0.9 percent to $7,650/7,655 per tonne from $7,580 on Tuesday as a softer US currency makes dollar-priced metals cheaper for other currency holders. Lead stocks in LME warehouses fell 3,050 tonnes to 83,375 - the lowest level since June 13.
Since July there has been strong demand for lead in Singapore with metal going to China, which has become a net importer of refined lead for the first time since 2004. "The imports from China are picking up," Weinberg said. "There have been several announcements of production cuts for both lead and zinc and demand is not as bad as we expected."
Zinc gained 3.4 percent to a high of $1,850 before closing at $1,849. LME stocks fell 1,300 tonnes to 161,225. On Tuesday, the metal, mainly used to galvanise steel, closed at $1,790, after falling more than 2 percent. The metals were seen finding a floor with zinc prices falling by 24 percent this year and lead is down 20 percent. "The situation is positive for lead and zinc, both are energy-intensive metals and production costs are high," Weinberg said.
Also nickel bounced after being oversold, down over 20 percent this year as demand from stainless steel producers, using nickel for durability, have fallen behind expectations. Nickel was last at $21,000, up 4.8 percent, versus $20,030 on Tuesday.
Traders in Shanghai said they had seen new material coming into the physical market, dragging down spot prices, and there was talk of "tens of thousands" of tonnes of copper arriving. "A replenishment would not necessarily be bearish as stocks in Shanghai are critically low at the moment," Nick Moore, commodity strategist at Royal Bank of Scotland, said.
Shanghai exchange warehouse stocks, at 21,796 tonnes last week, or about two days of Chinese daily consumption, are tight, despite rising inventories in LME warehouses. LME copper stocks, used in construction and power cables, rose 950 tonnes to 167,850, the highest level since February 6.
Moore said copper stocks tend to increase in August, but following the end of the Olympic Games the market would look forward to a seasonal bounce in the fourth quarter. Miner Antofagasta said it expected fundamentals for the copper market to remain sound with prices remaining strong well into 2009, despite a softening of prices in the seasonally weaker third quarter.
Aluminium closed at $2,765 a tonne from $2,768 as rising oil prices put pressure on the energy-intensive metal, even as inventories of the metal declined. Stocks fell 2,200 tonnes to 1.16 million tonnes, but are still close to their highest levels since April 2004. Tin was under pressure from profit-taking after being the best LME metals performer this year gaining 25 percent. It closed at $20,550 from $20,700 on Tuesday.
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