Copper springs back

Copper bounced from a nine-month low on Thursday on euro gains against the US dollar, providing a temporary breather, but turbulent markets capped gains. Aluminium dropped to its lowest since January and nickel was at its weakest level since April 2006, before rebounding. Earlier, tin sank almost 8 percent to an eight-month low.
Copper for delivery in three months on the London Metal Exchange touched $6,625 per tonne in early trade, its lowest since December 21. It touched a high of $6,987 a tonne before closing at $6,749 from its close of $6,760 on Wednesday. "It's a bit of a relief rally, with some increased appetite for risk and more confidence coming through," Calyon analyst Robin Bhar said.
"This is a temporary respite - there is still a lot of nervousness about being on the base metals market." European shares rose after six of the world's top central banks announced a series of measures to improve dollar liquidity, providing some relief for the battered financial markets.
Analysts said the euro's rise against the dollar was the reason behind the rebound. But this brief boost did not mean the end of the financial havoc in global markets.
"Some metals look good value at current levels ... because of current volatility and downside potential due to poor sentiment it may be too early to recommend buying at these levels until the dust settles," Barclays Capital said in a note.
While some investors bought commodities like oil and gold as a hedge against a worsening crisis on Wall Street, industrial metals were held back by fundamental concerns, including the weakest US housing starts data since 1991.
"Fundamentals do not look good for base metals, at least for the short term," an LME trader said. "People who express interest in the copper market are not getting involved at the moment. They are waiting on the sidelines," he said.
The question of China - the top consumer whose weakening demand so far this year has disappointed the market - casts a shadow on prospects for base metals. Some analysts doubt the decoupling theory, where emerging markets, and specifically China, remain immune to the slowdown in the rest of the world. But some still bet on that theory, at least in the longer term.
"Longer term trends in demand remain supportive of prices," Nikos Kavalis, senior metals analyst at GFMS Metals Consulting said at a briefing on Wednesday. LME aluminium closed down $5 at $2,495 a tonne, above an earlier eight-month low of $2,487, shrugging off a nearly 13 percent rise in stocks in the past two days.
Dealers said the material was probably being used as collateral for debt or to cover margin calls in other markets. Zinc ended $4 down at $1,716, while lead closed up $25 at $1,805, nickel down $375 at $16,750. Tin was untraded at the close, but was quoted at $16,800/16,825 from $17,650 on Wednesday.