Copper rebounded 1.7 percent higher before reversing gains on Wednesday to match a 4-year low hit in the previous session as the uncertain economic outlook weighed despite a weak dollar. The dollar slipped against the yen and a basket of currencies in thin trade as investors braced for US data that may add to the grim outlook for the nation's economy.
Figures on Tuesday showed the US housing market took a sharp turn for the worse last month. "It's a mixed bag," said Leon Westgate, an analyst at Standard Bank. "Volumes are pretty low as you would expect ahead of the holiday period ... The metals are generally trading sideways. Volatile copper for three month delivery on the London Metal Exchange closed at $2,825 a tonne in rings from $2,870 on Tuesday and compared with a session high at $2,918.75.
Prices of the metal used in power and construction fell to a 4-year low of $2,825 on Tuesday and have fallen almost 70 percent since a record high of $8,940 in July. Fears over demand due to the deteriorating global economic outlook have caused the decline in prices. Adding to economic concerns, copper LME stocks rose 3,250 tonnes to 331,450 tonnes, its highest level since early 2004.
The copper price declines are starting to cut supply, and further announcements of mine closures and production cutbacks are expected over the coming month, a Macquarie Bank report said. Aluminium dipped 1.3 percent to a low of $1,539.50 but closed at $1,540 from $1,560. The metal used in transport and packaging has fallen heavily from an all-time high of $3,380 hit in July as downbeat news from auto makers dragged prices lower.
LME aluminium stocks jumped 17,400 tonnes to 2.25 million tonnes - a reminder of weaker demand for the metal - and a 14-year high. Citigroup's Thurtell said recent cutbacks from Chinese producers was helping support aluminium prices.
Nickel was last bid at $9,600 a tonne from $9,750 at the close on Tuesday, lead traded at $875.50 from $870 and tin was at $9,850 versus $9,900. LME lead stocks are currently at 44,575 tonnes and are down around 64 percent this year. Zinc traded at $1,144 versus $1,158 and saw its inventories climb 18,900 tonnes to 253,625 tonnes, its highest since May 2006.