Copper slips, dwindling stockpiles limit losses

Copper slipped on Tuesday as traders paused for breath a day after the metal hit eight-month peaks amid dwindling stockpiles and signs of progress in US-China trade talks. Available, or "on-warrant", London Metal Exchange copper stocks fell further on Tuesday, slipping to only 29,775 tonnes - their lowest level since July 2005.
Investors were also less fearful that the US-China trade conflict will hurt growth after US President Donald Trump deferred plans at the weekend to increase tariffs on Chinese goods.
"The market was focused on the dollar, Chinese data and the trade deal - and on all three, people have become a bit more confident," said Michael Widmer, analyst at Bank of America Merrill Lynch.
He added that with copper mine supply tight, disruptions escalating and demand set to hold up, he is forecasting a small deficit this year and an average third-quarter price of $6,750 a tonne.
Three-month copper on the London Metal Exchange was last bid down 0.3 percent at $6,460 a tonne in official midday rings, having hit its highest since July 4 at $6,540 a tonne on Monday.
The dollar held near a one-week low against its rivals ahead of testimony from Fed Chairman Jerome Powell. A weaker dollar makes dollar-priced metals cheaper for non-US investors.
LME data showed one entity holds more than 90 percent of copper cash contracts and warrants. This has pushed cash copper to a premium of $44.50 against the three-month price.
Factory activity in China is expected to have contracted for the third month in a row in February, a Reuters poll showed.
LME copper could break resistance at $6,525 a tonne and rise to $6,662 in a week, as suggested by its wave pattern and a projection analysis.
Zinc traded down 0.2 percent in rings at $2,713 a tonne, having hit its highest since early February. LME zinc stocks fell by 8,925 tonnes to 69,475 tonnes, the lowest since October 2007, data showed.
Deliverable stockpiles at the LME are close to only a day's worth of demand and rebuilding holdings could require a full-blown global recession, according to ICBC Standard Bank.
Aluminium traded 0.4 percent down in rings at $1,899 a tonne, lead traded down 0.6 percent at $2,075, tin traded down 0.4 percent at $21,655 and nickel was last bid down 0.6 percent at $12,900.