Copper moves up

Copper rose on Wednesday, reversing earlier losses as the dollar fell on weak US economic data, but sentiment was shaky because the data also raised doubts about the outlook for growth and metals demand. Copper for three-months delivery on the London Metal Exchange closed at $6,725 a tonne, versus a close of $6,685 a tonne on Tuesday when it touched a one-week low during the session. The metal earlier hit a session high of $6,750.
The euro hit a two-month peak against the dollar after the US retail sales and import prices data. "In this environment investors are going to be cautious to negative," said John Meyer, an analyst at Fairfax in London. Analysts said the market was struggling for direction, partly due to the mixed nature of US data in recent weeks. "There has been some positive data out of the US but at the same time there are also some negative indicators, so it's difficult to see any proper direction in the market," Meyer added.
Data showed US import prices fell a surprisingly large 1.3 percent in June, the biggest decline since January 2009, while sales at US retailers fell for a second month in June.
"It's not surprising retail confidence is down," Alex Heath, head of base metals at RBC Capital Markets, said. "The recovery such as it is will be long and drawn out and painful," he added. World stocks had hit a three-week high earlier in the session but this rally also fizzled out.
Rio Tinto raised concern of a possible double-dip recession in OECD countries and a slight slowdown in Chinese growth when it presented June quarter output data. "Markets for most of our products are strong and the overall long-term demand outlook is positive. But in recent weeks, fears about a possible double-dip recession in OECD countries and a slight slowdown in Chinese growth have led to some weakening in sentiment," Chief Executive Tom Albanese said.
Copper is expected to get support from tightening supply - Japanese mills are bracing for the lowest contracted fees to turn concentrate into metal in a decade, due to limited ore supply. Copper inventories fell by 4,050 tonnes on Tuesday, bringing the total to 428,500 tonnes, showing a fall of more than 100,000 tonnes since mid-February. Cancelled warrants had a net increase of 5,250 tonnes, with most of it at US locations.
Spot refined copper buyers in China, the world's top consumer, face the highest premiums since the first half of last year on strong demand and limited supplies as an expected pickup in imports has not shown in monthly trade figures, traders said on Wednesday. Aluminium was at $2,005 a tonne from $1,995 a tonne on Tuesday and inventories of the metal last dropped by a hefty 7,650 tonnes to 4.38 million tonnes. Steel-making ingredient nickel was at $19,400 a tonne from $19,550 while battery material lead traded at $1,826 from $1,826.
Investors are also keeping close tabs on the lead market, with LME data showing a dominant position controlling between 50-80 percent of cash warrants. Zinc was at $1,850 from $1,865 and tin was last quoted at $17,950/18,000 a tonne from $18,000, after matching a two-week high of $18,100 a tonne first struck on Tuesday.