Copper rose on Tuesday as worries about Japan's nuclear crisis eased and boosted risk appetite, and with the support of a weaker dollar, but poor Chinese import data weighed on demand prospects. Benchmark copper prices on the London Metal Exchange (LME) closed at $9,490 a tonne after falling 1.2 percent on Monday to close at $9,405.
The Japanese situation seems to be improving a bit, and a weaker dollar is lifting the market, but having said that, the situation is still fragile," said analyst Edward Meir at MF Global in New York, adding that for copper to get back to $10,000 in the short term would be very difficult.
Lighting has been restored at one of the control rooms at Japan's crippled nuclear plant, domestic media reported, bringing the operators a step closer to reviving the plant's cooling systems to stop radiation escapes. The US dollar hit a 15-month low against other major currencies and could extend losses as a resumption in risk appetite spurred demand for currencies that offer higher returns.
A weaker US currency makes dollar-priced commodities more affordable for holders of other currencies. Chinese data showing lower-than-expected commodities imports for February, released on Monday, cast doubts over demand from the world's top consumer of copper.
"Chinese import/export data yesterday was pretty bearish for the copper market, and people would hope this was only an aberration," said RBS head of commodities strategy Nick Moore. Supporting copper, Imperial Metals Corp said some shipments from its copper mine may be delayed after three Japanese companies declared force majeure on shipments, following damage to ports at a smelter after the earthquake.
But concerns about supply were kept in check by a rise in copper stocks at LME warehouses. Inventories climbed 3,850 tonnes on Monday to total 434,350 tonnes, scaling their highest levels since July due to an uptrend that started in December. Rising stocks have fanned concerns about a recent slowdown in Chinese demand as investors worry that the government's recent moves to stem inflation by tightening monetary policy could be hitting the top copper consumer's buying power.
Aluminium ended at $2,600 a tonne from $2,570 a tonne while zinc finished at $2,331.5 from $2,280 a tonne and battery material lead closed at $2,670 from $2,645 a tonne. Tin finished at $30,150 from a last bid of $29,650 a tonne and nickel finished at $26,350 a tonne from a close of $26,750 a tonne. Also helping copper, investors anticipated strong Japanese copper demand later this year when the country rebuilds. "The expected boost to demand for base metals from the Japanese reconstruction is likely to result in higher prices during Q2," Societe Generale said in a note. "The underlying strength of the global economy should also help base metals to recover from the recent sell-off," the note added.
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