Copper prices faltered on Thursday as the dollar hit three-month highs against a currency basket, but analysts said a healthier global demand outlook was expected to fortify sentiment and prices. Benchmark copper on the London Metal Exchange closed at $6,870 a tonne from $7,039 at the close on Wednesday, when the metal used in power and construction touched $7,067, the highest since December 8.
The dollar surged to a three-month high against a currency basket after the Federal Reserve voiced growing optimism about the health of the US economy, while the euro tumbled on worry about Greece's fiscal health. However, the damage from the dollar has partly been offset by improving economic data from the United States, the world's largest economy, highlighted in a statement from the Fed on Wednesday, and expectations of higher demand.
-- Aluminium stocks hit record high
-- Tin hits six-month high
"For metals, the uptrend is still very much in place," said analyst Gayle Berry at Barclays Capital, adding the upbeat economic data over the past couple of weeks has raised the prospects for metals. "Copper is in a strong position ... It has managed to hold around the $7,000 psychological level," said Daniel Briesemann, analyst at Commerzbank.
Holding copper back though are inventories in LME warehouses, at 474,575 tonnes - a gain of about 85 percent since the middle of July and the highest since April. Aluminium stocks hit a record high above 4.637 million tonnes, nearly double the levels seen at the start of 2009. However, prices of the metal used widely in transport and packaging are up about 45 percent this year because about 70 percent of LME stocks are tied up in financing deals until May and so are not available to the market.
Also a plus are cancelled warrants - material already earmarked for delivery - at around 200,000 tonnes. "Though it's not available there's a massive stock overhang, a capacity overhang and the outlook is for a large aluminium market surplus over the next few years," said Max Layton, analyst at Macquarie. Tin prices bucked Thursday's softer trend in metals and rose to their highest in six months at $15,820 and closed $275 higher at $15,775 a tonne.
Tin stocks are currently at 26,400 tonnes, down only about 500-600 tonnes from the seven-year high hit in November. But LME data shows between 80-90 percent of the stocks are held by a single dominant position. Nickel closed at $17,100 a tonne from $17,500 at the close on Wednesday, aluminium at $2,220 from $2,276 and zinc at $2,391 from $2,434. Battery material lead traded at $2,359 a tonne from $2,410.
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