Copper inched up on Tuesday as supply worries fuelled by a strike at the world's biggest copper mine offset concerns about demand growth, after data showed weaker manufacturing activity and consumer spending in the United States and poorer factory activity in top consumer China. Benchmark copper on the London Metal Exchange closed at $9,680 a tonne from $9,650 at the close on Monday.
The metal used in power and construction dipped to a low of $9,615.50 a tonne, its lowest since July 25 after US consumer spending unexpectedly fell in June to post the first decline in nearly two years. "The latest data is not pointing to a particular bright picture...the health of the underlying global economy is still struggling," said analyst Leon Westgate at Standard Bank.
"Disappointing macro data is shifting focus away from supply issues. These issues are lending support but are not driving prices higher; people look at issues not only in the EU but also in the US and this weighs on sentiment."
China is the world's largest consumer of copper, accounting for nearly 40 percent of global demand estimated this year at about 20 million tonnes. Supporting copper were worries about supply as a strike at the Escondida mine in Chile, which produces 7 percent of the world's copper, enters its 12th day. Workers at the mine have lowered their bonus demands, raising expectations that a solution could soon be reached. Also helping to support prices are stocks of copper in LME approved warehouses, which at 465,625 tonnes are down more than 8,000 tonnes since July 20.
Expectations that China would soon return to the international copper market after a long absence were reinforced by Mick Davis, chief executive at Anglo-Swiss Xstrata. Davis said the copper stock overhang in China has gone, and that supply tightness is likely to be seen by the fourth quarter. "Together with falling inventories and the ongoing strike in the Chilean copper industry, we think industrial metals should be well supported on the downside," Credit Suisse said in a note.
Aluminium, untraded in rings, was bid at $2,583 a tonne from $2,585. Some analysts were bullish on aluminium prices given a strong outlook for demand from China. "We suspect that strong global aluminium demand in June was due to strong auto and can maker demand and partly related to precautionary consumer buying, as the threat of power cutbacks hung over Chinese producers," Citi analysts said in a note.
Battery material lead closed at $2,561 a tonne from $2,565, while zinc, used in galvanising, slipped to $2,440 from $2,461. Three-month tin finished at $27,250 a tonne from $28,100. Nickel ended at $24,800 a tonne from $24,625.