Copper steadies

Copper steadied on Friday, helped by a weak dollar and threats to metal supply, although concerns about a slowdown in the United States and a debt crisis in Europe weighed on sentiment and subdued gains. Benchmark copper closed at $8,825 a tonne from Thursday's close of $8,774 a tonne.
The metal used in power and construction earlier fell to $8,700, its lowest level since Aug. 11. "Short-term we are negative on base metals and we think that cautiousness is warranted at this point in time," said Arne Lohman Rasmussen, analyst at Danske Bank. Copper prices have fallen more than 10 percent so far this month.
Investors have grown increasingly uneasy after disappointing data from the United States prompted fears a slowdown in the world's largest economy would hit global growth prospects, compounded by a worsening debt crisis in the eurozone. "We know that there are some long positions (in base metals) out there that could easily be squared out especially if we start to see euro/dollar moving lower and we see a risk of that," Rasmussen said.
Supply threats in Latin America are also on investors' radar screens. Workers at Chile's Collahuasi, the world's No. 3 copper mine, have threatened a one-day stoppage on Sept. 2 if the company does not hire back workers fired after a previous disruption. "Setting aside the weak macro environment, copper's fundamentals remain well supported. Risks of short-term disputes and potential supply outages remain," ANZ said in a note.
In a further boost to copper, inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.3 percent from last Friday, raising expectations that destocking in China was under way. Aluminium stocks fell by 5.8 percent. China accounts for nearly 40 percent of global copper demand, estimated at around 19 million tonnes this year. More than 100,000 tonnes of aluminium flowed into London Metal Exchange registered warehouses in Vlissingen, latest LME data showed, in another big increase that has inflated stocks in the Dutch port to over 700,000 tonnes.
About 70 percent of aluminium stocks are tied up in financing deals, and analysts say these deals are unlikely to be unwound soon, given the limited money-making opportunities available to banks facing historically low interest rates. A typical deal consists of banks buying nearby aluminium from a producer, selling it forward at a profit and striking a warehouse deal to store it cheaply for an extended time period.
Aluminium closed at $2,355 a tonne, from a last bid of $2,338 a tonne on Thursday. Tin ended at $22,800 a tonne, from Thursday's $22,750 close. The latest government crackdown on the Indonesian tin industry will dampen some production and support benchmark prices, but the uncertain economic and demand outlook will play a bigger role in the market, analysts said. Zinc closed at $2,193 a tonne, from $2,178 while lead was $2,302 from Thursday's close of $2,301. Nickel was $21,200 from $21,300.