Copper moves higher

Copper rose to its highest in more than two months on Tuesday, boosted by supply concerns and economic data from the United States, yet some wondered if copper prices have climbed too far too fast, given still-scant signs of demand from big consumer China.
Three-month copper on the London Metal Exchange closed at $9,540 a tonne, its highest since late April, compared with a close of $9,455 on Monday. The metal used in power and construction remains around 6 percent from a record seen in February.
New orders received by US factories bounced back in May, boosted by demand for transportation equipment, a government report showed. But the 0.8 percent rise was slightly below economists' forecast. "Sentiment a couple of weeks ago was quite poor...this is a relief rally," analyst Stephen Briggs of BNP Paribas said. But he added: "(A price recovery) seems to me a little bit early. We've got all of these problems around the macro market... and I don't think the evidence of Chinese demand picking up is strong enough yet."
A pick up in demand for risky assets from last week softened a bit on some speculation about a possible rate rise in China this weekend, as well as a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought.
Expectations that appetite from top consumer China will improve alongside European and US industry after summer - against a backdrop of constricted supply - has fed predictions that copper will print new records later this year. BNP Paribas sees copper hitting a record near $11,000 in the second half.
But so far, Chinese consumers do not appear to be making major buys. LME copper stocks have fallen by some 12,000 tonnes to two-month lows, but the latest inventories data from the Shanghai Futures Exchange showed that stocks jumped by more than 9,000 tonnes on the week.
"Backwardation in the (Shanghai) market has all but disappeared following last week's stock increase. This is a sign that the buying has dropped as prices have risen too fast for some," broker Triland said in a note. Elsewhere, the euro retreated against the dollar and the Swiss franc as soft eurozone data and concerns over the health of the Chinese economy pushed investors away from riskier currencies back towards those perceived to offer safety.
"Overall we would watch the dollar closely if it continues to rebound then we would expect that to produce a headwind for the metals," FastMarkets said in a note. A government report showed new orders received by US factories bounced back in May, boosted by demand for transportation equipment and a range of other products. The copper supply pipeline, which is at risk of severe disruptions, was highlighted again on Tuesday, with weather and strike issues in the world's top copper producer, Chile, overnight. Heavy snow and winds severely affected output at Chile's Collahuasi, the world's No. 3 copper mine, the head of its main union said. The mine operator said it had no figures on any impact, however.
"This is a fairly important mine," Danske bank analyst Christin Tuxen said. "That could certainly be one of the reasons (pushing up copper prices)." Bad weather has not affected operations at BHP Billiton's Cerro Colorado copper mine in northern Chile, union president Gustavo Tapia said. Meanwhile, state-run Codelco sought to avert a 24-hour strike by workers demanding a bigger say in its restructuring.
This comes on the heels of a seven-day strike at Freeport-McMoran Copper & Gold Inc's Indonesian unit. In other metals, battery material lead closed at $2,695 a tonne from $2,684, having hit its highest in nearly three months. A trader said there had been a flurry of demand for high grade material in Europe. Aluminium closed at $2,576 from $2,510. At the LME, traders noted that there was a large purchase of some 3,000 lots of the December 2013 contract last week.
Stainless steel material nickel closed at $23,300 from $23,175. Tin traded at $26,250 a tonne, having hit a one-month high of $26,500 a tonne, from a bid of $25,650 on Monday while zinc, used in galvanising, closed at $2,411 from $2,398 at Monday's close.