Copper prices slipped on Tuesday as the market worried about prospects for demand in top consumer China, where growth has slowed, but a weaker dollar helped cap losses. A lower US currency helps boost metal prices by making the sector cheaper for holders of other currencies.
Copper ended down at $5,455 a tonne from $5,480 at Monday's close. "From the metals perspective we need to see improving macro (economic) data out of China to build a bit of confidence," said Grant Sporre, analyst at Deutsche Bank. "Some of the indicators have stabilised, and some are showing tentative signs of improvement, but to build confidence we need to see that trend continue."
Also holding copper back is the summer lull in demand from China, which accounts for about half of global consumption estimated at around 22 million tonnes this year. Benchmark nickel earlier climbed 2.4 percent to a two-week high at $11,980 a tonne, after China trade data showed imports of the stainless steel ingredient jumped to almost 40,000 tonnes in June. Nickel ended down at $11,675 a tonne from $11,700. However, before nickel can recover significantly, the market will need to see lower inventories, which in LME-approved warehouses stand at 453,582 tonnes, about three months of global consumption estimated at around 1.9 million tonnes this year.
Three-month aluminium earlier slipped to a two-week low at $1,660, on worries about Chinese exports and excess supplies. Aluminium fell 1.6 percent to $1,661 from $1,689 on Monday. "New production capacities of more than 2 million tonnes per year were put into operation in China in the first half of the year. A further 3 million tonnes per annum are set to be added in the second half of the year," Commerzbank said in a note. "Chinese producers profit from low electricity costs, which are partly subsidised, from significantly lower raw material costs such as alumina, and from an export incentive scheme." Zinc was untraded at the close, but bid at $2,035 from $2,052, lead traded at $1,790 from $1,814 and tin at $15,375 from $15,550 on Monday.
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