Copper edged down on Tuesday to its lowest level in more than a week after a weak dollar failed to provide support as investors worried that prices might have exceeded fundamentals in the face of mixed economic data. Copper for three-months delivery on the London Metal Exchange touched $4,922 a tonne, its lowest since June 8, before closing at $4,980, down $26 from Monday. It rose as high as $5,090.25 a tonne during the session.
"Any positive data that comes out seems to be soaked up by industrial metals," analyst Carl Firman at Virtual Metals said. "But do the fundamentals support these prices? I don't think so. The fundamentals are still pretty weak," he said.
A spate of improving data in early June sparked a strong rally in copper, used in power and construction, bringing the metal's gains in 2009 to more than 60 percent, supported largely by demand from China, the world's top copper consumer. This floor appears to be falling away, as demand from China was likely underpinned by stock-piling that is now subsiding, and as markets enter a traditionally quieter trading season.
The market seemed to shrug off supply side news from Africa's top copper producer, Zambia, where a nation-wide power blackout has forced copper mines to trim output and shut down machinery. Instead, major market players continued to raise their concern about fundamentals. Global miner Rio Tinto said its trading outlook for the rest of 2009 was uncertain due to pricing of its main commodities.
The power-intensive metal was at $1,610 from $1,609. Stocks of aluminium once again shot up, rising 47,225 tonnes to a record above 4.3 million tonnes. Inventories have struck record highs repeatedly this year as demand has waned. Analysts say due to the ailing auto demand, coupled with the troubles at General Motors, inventories are set to remain swollen. Zinc was $1,569 from $1,575, while battery material lead was at $1,650 from $1,677.
Nickel was higher at $15,100 from $14,775. Tin was at $15,375 from $15,050. On Monday, the metal moved into contango - a premium for three-month contracts over cash - from backwardation for the first time since early October. The contango is currently at $29. The backwardation, near $300 in early June, has coincided in recent months with a strong dominant position sometimes holding as much as 90 percent of LME tin stocks. Bucking this trend, latest data indicates no major dominant position on tin.