Copper closed higher on Thursday as a weak dollar offset the influence of falls in stock markets but economic uncertainty ensured a lack of real direction in trade. Copper for three-months delivery on the London Metal Exchange ended at $4,755 a tonne versus $4,665 quoted late on Wednesday.
European shares fell in volatile trading, while US home sales data pointed to a downbeat housing market. But a weaker US currency lent support by making metals priced in dollars less expensive for holders of other currencies. "We've had such a good run much of this year, I think with the summer slowdown...I'm more inclined towards gradual slipping in markets across commodities," said Marc Elliott, an analyst at investment bank Fairfax in London.
"I've got reason for conservative optimism for the fourth quarter...over the last few months, the world has taken a lot of pain and hopefully by Q4, people will have a clearer idea." But some analysts said copper faced weakness in coming months as supportive buying from China tails off and ahead of a seasonally quiet market period.
"The buying spree that China went on in the first half of the year is going to be very difficult to sustain because it was largely fuelled by restocking, which is a finite process," said Gayle Berry, metals analyst at Barclays Capital in London. Choppy copper hit a day's low of $4,552 a tonne, but then rebounded higher to touch a near-three week peak of $4,746.
Elsewhere, many markets across North Asia were on holiday, including the Shanghai Futures Exchange. Copper inventories data was supportive. Stocks of copper at LME warehouses dropped by 2,150 tonnes to 317,125 tonnes. Cancelled warrants stood at 43,650 from 43,375 tonnes. Aluminium closed at $1,412 from $1,405. The relentless rise in LME stocks continued, jumping 16,550 tonnes to a new record above 4.2 million tonnes.
Used in transport and packaging, aluminium has come under pressure in recent months on downbeat data from auto makers. It earlier hit $1,383, its lowest level since early April. Underlining the uncertainty over aluminium demand from the embattled automaking sector, General Motors Corp and the US Treasury made an improved equity exchange offer to bondholders.
Aluminium cancelled warrants were at 52,700 from 50,250 tonnes on May 26. Battery material lead closed at $1,478 from $1,445. Tin ended at $13,650 from $13,600. Lead and tin supply worries remain due to a dominant position controlling between 50 and 80 percent of cash warrants on LME stocks.
Zinc ended at $1,475 from $1,460, while steel making ingredient nickel closed at $13,500 from $13,395. On Wednesday prices touched $13,900 but failed to crack resistance between $13,500 to $14,000 - the top of the trading channel since late October. Nickel stocks rose 1,218 tonnes to 109,860 tonnes. LME nickel stocks have fallen sharply since late April, when they reached above 114,400 tonnes.
In April, Chinese nickel imports hit a monthly record of 21,031 tonnes. Analysts said nickel has recently been supported by a slow trickle of re-stocking by Chinese steel mills, although speculative stockbuilding could also be a factor. "While medium to longer term technical studies continue to improve with a major bottoming pattern appearing to be under construction, prices remain firmly range bound for the time being," brokerage Newedge said in a note.
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