Copper dips on dollar

Copper fell on a firm dollar, but tight supplies and good demand prospects kept the metal within sight of a record high and helped counter investor concerns over a euro zone debt crisis.

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Copper fell on Wednesday on a firm dollar, but tight supplies and good demand prospects kept the metal within sight of a record high and helped counter investor concerns over a euro zone debt crisis.

Three-month copper on the London Metal Exchange fell 0.37 percent to $9,791 a tonne by 11:35 SA time, less than 4 percent below the record high of $10,190 it hit in February. It touched $9,873.50 in the previous session, its highest since April 11.

“The industrial metals complex has remained pretty resilient in spite of what's happening in Europe and in spite of the stronger US dollar,” RBS analyst Daniel Major said.

“That says something about the market's attitude towards the base metals, and perhaps looking towards the underlying demand story, which as far as we can tell has been reasonably resilient.”

In the United States, groundbreaking for homes rose to a six-month peak, offering hope for the battered construction industry and he general health of the world's largest economy. Copper is used widely in the construction industry.

A firm dollar also put a floor under metal prices.

Although the euro inched up against the US currency, gains were seen limited and vulnerable. Investors are hopeful European leaders will reach some kind of deal to ease the debt problems in Greece at a summit this week, but doubtful that this would ease fears of contagion.

A stronger dollar makes commodities more expensive for holders of other currencies.

STRUGGLE

Falling production and lower ore grades, combined with strikes and floods in producing countries, have helped also lift the outlook for metals prices.

Global miner Rio Tinto reported mined copper output was down 24 percent on the second quarter of 2010, mainly reflecting lower grades at its 30 percent-owned Escondida mine and Kennecott Utah Copper division.

“Certainly heading into reporting season what has been apparent is the continuing struggle in the copper industry to deliver volume,” Major said. “This highlights a broader theme across the industry.”

Lead , used to make batteries, was 0.8 percent down at $2,746 per tonne, from $2,770. It hit $2,779 on Tuesday, its highest since mid-April.

May data released by the International Zinc and Lead Study Group (ILZSG) showed a tightening balance in the refined lead market, Credit Suisse said in a note.

“The ILZSG stated the surplus at a small 6.8 kt (thousand tonnes) in May, which marks a strong improvement from the 46.1 kt surplus observed in April,” Credit Suisse said.

Zinc, used in galvanising, was $2,460 per tonne from $2,490 at the close on Tuesday. Aluminium was $2,546 from $2,550, tin was $27,700 from $27,890 and nickel was $23,985 from a last bid of $24,100. - Reuters

Source: http://www.iol.co.za/copper-dips-on-dollar-1.1102647

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