Copper rose on Thursday, rebounding from earlier falls, as the dollar weakened against the euro and a basket of currencies, but further gains for the metal were capped by concern about lacklustre demand from top consumer China. Three-month copper on the London Metal Exchange closed at $7,280 a tonne, up from $7,198 on Wednesday.
It is on track for a 2 percent fall this week and a fall of 9 percent so far this year. Further weakness could lie ahead for the metal used in power and construction as buying activity among fund managers had abated, and concerns remained about the outlook for demand from China, which accounts for 40 percent of global copper demand.
"CTA short covering has dissipated and that was basically giving bid support in the market and the CTAs are now net sellers," said George Adcock, analyst at Marex Spectron, referring to commodity trading advisers. The dollar fell against the euro and a basket of currencies after reports on US housing, labour and regional business conditions pointed to weakness in the economy.
A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies. "There does not seem to be any kind of spark to lift metals higher, at least for now. One possible trigger could come out of Europe if and when policymakers indicate that they may consider policies that would stimulate more growth," said Ed Meir, analyst at INTL FCStone.
In remarks published late on Wednesday, China's vice-premier said the country's demand for commodities had weakened, and that China must "strictly prohibit" further expansion of bloated industrial sectors. In Europe, falling prices in Germany and France pulled euro zone consumer inflation to a three-year low in April while imports fell 10 percent in March, as new data showed the depth of the bloc's downturn.
Overall, all commodities are under pressure. This was reflected in reports this week that showed global investment banks suffered another bruising decline in commodity trading in the first three months of this year. "The trend has been down for copper. I still feel we've got further downside to come because of the trend of weak global macro data coming through," said Tim Radford, global analyst at Sydney-based advisor Rivkin. Tin ended at $20,955 from $20,755 at the close on Wednesday and lead, untraded at the close, was bid at $1,993 from $1,970. Nickel closed at $14,900 from $14,905, zinc at $1,832.50 from $1,823 and aluminium ended at $1,852 from $1,840.