Base metal prices were mixed in Asian trade on
the London Metal Exchange Tuesday, as concern about the euro-zone debt crisis
and Chinese physical demand again damped bargain buying following a recent
pullback.
Benchmark three-month copper was $7,957.75 a metric ton at 0530 GMT, down 0.3%
from its previous settlement and 5.8% lower since the start of April.
"Copper looks weak at this juncture" and is likely to trade around key
support at $7,885/ton in the near term, Triland Metals analysts said in a note.
A firmer dollar capped the metals' upside, as dollar-denominated commodities
become more expensive to investors holding other currencies when the greenback
firms. The euro was trading at $1.3111 compared with $1.3142 late Monday in New York.
The euro remained under pressure due to renewed fears about Spain's debt
burden after the yield on the 10-year Spanish government bond rose above 6.0%
Monday for the first time since the European Central Bank launched its first
liquidity operation.
In addition to macroeconomic concerns, the fundamental picture for copper
remains weak due to deteriorating market conditions in China, traders
and analysts said.
High inventories and low physical demand from fabricators in China, the
world's second-largest economy, indicate that copper prices could fall further
over the next few weeks, a U.K.-based trader said.
"People no longer have the sense that every dip is a buying
opportunity," the trader said, noting that most of the current volume on
the LME is coming from commodities funds rather than industry participants.
Copper is still 4.7% higher since the start of the year due largely to
speculative investment fueled by sustained accommodative monetary policy in the
U.S. and Europe.
Asian traders said they expect a bearish tone from delegates at this week's
major copper conference in Chile,
despite supply constraints that should underpin copper prices in the long term.
Three-month aluminum rose Tuesday, gaining 0.7% to trade at $2,078/ton. A
Tokyo-based trader said tighter supply is supporting aluminum prices even as
demand remains soft in major consuming regions such as Japan.
Aluminum supply has fallen since the start of the year as large volumes of the
metal have moved into longterm financing deals, which can keep metal off the
market for years at a time. The Tokyo-based trader tipped support at $2,000/ton.
