Copper rose on Wednesday after orders for long-lasting US manufactured goods rose more than expected, but gains were capped as the dollar rose and markets awaited a US Federal Reserve speech on Friday. Three-month copper on the London Metal Exchange closed at $8,875 from Tuesday's $8,850 close.
The metal used in power and construction has lost nearly 9 percent since the start of the month and 13 percent since its February 2011 record of $10,190 a tonne. New orders for US durable goods surged in July on strong demand for transportation equipment, government data showed on Wednesday, but a gauge of business spending fell. The dollar rose against a basket of currencies, recouping earlier losses. A stronger dollar makes commodities priced in the US currency less attractive for holders of other currencies.
"It's still a very uncertain outlook for metals in the short term," Arne Rasmussen of Danske Bank said. "People are looking forwards to the Jackson Hole conference on Friday." Investors are nervous ahead of a speech by Fed Chairman Ben Bernanke, hopeful that he will signal new help for the economy, although many are sceptical that he will deliver. World stocks edged higher. "We are very sensitive to any macro news at the minute," VTB Capital analyst Andrey Kryuchenkov said. "That's why we are still in a very tight range. What I love about copper is it is very well supported. The range is narrow, but it is holding up quite well. The long term view is still good." Copper and aluminium have remained relatively resilient in recent weeks, drawing strength from prospects that rapidly industrialising countries will still need the metal, which is used in building construction, wiring and power cables. "Some of the strength we are seeing in copper and oil is from the effect that Asia is doing quite well - we saw the Chinese PMIs pick up slightly early in the week," Rasmussen said.
Nearby copper and aluminium prices are both trading at a premium against third-month contracts on the Shanghai Futures Exchange. "We've had some copper demand out of the Far East this week and last week as well. We've done some warrant business out of Korea. I would think that's going to be shipped to China," said an LME trader.
But consumption remains far from robust, and niggling worries that China will not plug the gap left by struggling Western economies have cast a shadow over the near-term price outlook for many metals. A spate of weak economic data soured risk appetite in Europe on Wednesday. Euro zone industrial new orders unexpectedly fell in June, while German business sentiment fell more than expected in August.
Copper output from Chile's Escondida fell 14 percent to 452,408 tonnes in the first half from a year earlier, the mine's operator said on Tuesday, as it grapples with lower ore grades. Falling supply was largely expected from Escondida, which is majority owned by global miner BHP Billiton and extracts 7 percent of the world's copper, but the drop highlighted supply-side constraints for copper.
In aluminium, cancelled warrants - or new orders for material - rose by 20,650 tonnes in the Malaysian port of Klang where the lion's share of stocks are now unavailable to market. Klang has roughly half a percent of total LME stocks, which stand at 4.65 million tonnes. Aluminium closed at $2,364 a tonne from $2,371 on Tuesday's close. Tin closed at $23,250 from $23,350, and zinc at $2,177.5 from $2,190. Lead was $2,348 from $2,334, and nickel was $20,825 from $20,660.
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