Copper declines

Copper fell on Monday as concerns over Italy's sovereign debt curtailed appetite for risky assets, and the dollar rose but strikes in producer countries highlighted supply constraints and lent support to prices. Three-month copper on the London Metal Exchange closed at $9,570 a tonne at 1431 GMT, from the $9,661 close on Friday.
The metal used in power and construction reached $9,789.75 on Friday, which was its highest since April 12, and within 5 percent of record highs of $10,190 hit in February.
"It seems like the European debt problems are going to be a source for continual dips all year long," analyst David Thurtell at Citi said. China raised rates last week, but further decisive tightening looks needed. Fighting inflation remains the top priority for the Chinese government and Beijing will maintain its current economic policy, Premier Wen Jiabao said on Monday.
The country's copper demand bounced back strongly in June, but the outlook was marred by falls in other key commodities, showing that Beijing's cooling measures were weighing on the economy. China is the world's top consumer of base metals. Strikes and weather-related shutdowns have kept already tight copper supplies in focus. Most analysts expect supply to fall short of demand this year.
Workers at Codelco's No 2 copper mine, Chile's El Teniente, began a company-wide strike on Monday after union leaders blocked access roads to the underground deposit, union officials said. Codelco is the world's top copper miner. But workers at Freeport Indonesia's Grasberg mine, one of the world's largest sources of copper and gold, will end a week-long strike after a deal between the firm and union leaders. According to a document seen by Reuters, workers would return to work on Tuesday.
Some of the world's top copper mines also started to return to normal on Saturday after severe winter storm dissipated over Chile's copper-rich north, companies' officials and union leaders said. Some analysts say that given copper's rally from below $9,000 just last month, further rises from current levels is limited. "Current market positioning entrenches our tactical view that over the short term, upside for copper is compressed due to the cyclical slowdown and policy uncertainty," Standard Bank said in a note. "We favour selling into rallies."
Aluminium fell through its 200 day moving average on Monday for the first time since September 2010, tracking losses in other metals. This bearish chart signal may send a "sell" message to funds and spur further liquidation, analysts said. "Aluminium has been particularly weak over the past two days, (due to) a somewhat easier tone in energy prices...We look for an eventual retest of the previous low of $2465," said MF Global in a note.
Relative strength in Chinese aluminium prices is supported by solid domestic demand across most main end-use markets, including construction, packaging, cable and appliances, although automotive sector demand has not been as strong, Macquarie said in a note. This has led to a draw in inventories monitored by the Shanghai Futures Exchange and a similar trend is seen in non-exchange based stock that is not easily visible to market. "We estimate that unreported aluminium stocks in China have fallen by over half from the most recent peak of 400,000t-plus in March to well under 200,000t today," it said.
Aluminium closed at $2,478 from a bid of $2,535 on Friday. Tin ended at $26,600 from a close of $26,800. Indonesia's refined tin exports rose 35.4 percent in June from the same period last year due to improving weather conditions, a trade ministry official said on Monday. Zinc closed at $2,310 from $2,356 at the close on Friday, and lead at $2,676 from $2,719. Nickel was untraded at the close, but bid at $23,220 from $23,890.