Copper fell nearly one percent on Tuesday, weighed by growing stockpiles of the metal and a stronger dollar which was buoyed by US economic data. "The fundamentals of copper aren't that fantastic at the moment and I think we are seeing some recognition of that. LME stocks continue to move higher," said Dan Smith, a metals analyst at Standard Chartered.
Benchmark copper for three-months delivery on the London Metal Exchange ended at $6,881 a tonne, down from a close of $6,940 on Monday. Highlighting still weak physical demand, copper stocks in LME warehouses rose 1,450 tonnes to total 480,900 tonnes, their highest since mid-April.
The dollar climbed to its highest level in nearly two months against the yen on Tuesday as US bond yields rose after strong housing data underpinned expectations for a US economic recovery. "The dollar seems to be getting back on its feet, which could weigh on the metals again but ... people feel that next year will be very bullish for commodities," said an LME-based trader.
Stronger-than-expected Chinese copper imports in November, a 300 yuan per tonne Shanghai-London arbitrage that favours Chinese imports and a positive lead from equity markets in Europe all failed to spark a pre-holiday rally. "There are Chinese manufacturers claiming they can't meet demand for autos and appliances. It highlights the strength of Chinese consumer demand," noted John Meyer, analyst at Fairfax.
In other metals traded, nickel ended at $17,750 from $17,900, with LME stocks rising 114 tonnes to 150,612, a whisker away from all-time record levels of 151,254 tonnes seen in 1994. The stainless steel making ingredient hit six-week highs on Monday despite record stocks, following an announcement that Russia will reinstate a 5 percent export tariff on the metal.
Elsewhere, aluminium ended at $2,242 from $2,268. Stocks of the metal in LME warehouses fell 3,525 tonnes but remained near record levels of around 4.6 million tonnes. Zinc, used to galvanise steel, ended at $2,434 from $2,438, having hit its best level since March last year on Tuesday, while battery material lead was at $2,306 from $2,310. Tin traded at $15,825 from $15,900.