A strong dollar knocked copper prices lower on Tuesday, while nickel jumped almost 7 percent as a gas explosion in Australia raised concerns over this year's output, traders and analysts said. In other metals, zinc fell to a 2-1/2-year low on poor fundamentals with a market surplus expected this year and tin shed more than 4 percent on technical selling.
Copper for three-months delivery on the London Metal Exchange ended at $7,870 per tonne, down 1.4 p the last quote of $7,980/7,985 on Monday. Copper has been depressed since touching a record of $8,880 per tonne in mid-April, with the market focusing on movements in currency markets in the absence of any fresh impetus.
"When we're talking about short term, it's entirely a dollar story," said Gary Mead, senior commodities analyst at Virtual Metals. Nickel rose 6.7 percent to touch an intraday high of $23,420 before ending at $23,390, up $1,440, with possible production losses prompting a short covering rally.
Stocks in LME warehouses are down by almost 10 percent since the start of May, but at the same time stainless steel demand - 70 percent of nickel's offtake goes to this market - has eased.
"While the ongoing trend of LME stock outflows and reduced output at Murrin Murrin are supportive, nickel prices remain weighed by a market surplus ... and subdued stainless steel demand," analyst Michael Jansen at J.P. Morgan said in a report.
Zinc fell 3.9 percent to an intraday low of $1,905 a tonne - its lowest level since early January 2006 - and the metal has lost some 20 percent so far this year. It was last indicated at $1,934, down $49 or 2.5 percent on arbitrage-related selling and poor fundamentals.
"The metal had gone up in the last weeks because of the price difference between Shanghai and the LME, now it's evened out again ... Funds have been negative on that one for a while," an LME trader said.
Tin fell 4.5 percent to $21,100 - the lowest since April 16 - before closing at $21,375, down $725 from Monday. Physical tin traders said the metal had found a floor at around $20,000 to $21,000, with concerns about Indonesian exports underpinning the market. Aluminium gained $3 to $2,955 per tonne and lead was higher at $1,965 versus $1,958/1,960.