Copper edges higher on dollar weakness; demand concerns cap gains

Tag : Red Copper

LONDON (Thomson Financial) - Copper edged higher in early Londontrade on Friday as dollar weakness continued to fuel buying of thered metal, but gains have been capped by concerns over the strengthof Chinese demand.
At 10:40 a.m., London Metal Exchange (LME) copper for three-monthdelivery was at $8,450 per tonne against $8,431 per tonne at theclose on Thursday.
Weakness in the U.S. dollar tends to boost commodities priced inthe greenback, as they become cheaper for holders of othercurrencies and more attractive as a financial hedge against thedecline of the U.S. currency.
Low inventories of the red metal are also providing support forcopper prices, with inventories monitored by the Shanghai FuturesExchange (SHFE) falling by 1,016 tonnes to 32,401 tonnes this week,and stockpiles in LME warehouses down 150 tonnes to 122,900 tonnesin Friday's report from the exchange.
But Chinese demand has been slipping, with price gains on the SHFElagging the LME. Concerns are also rising that slowing economicconditions, record oil prices above $140 per barrel and tightercredit conditions could dent demand for base metals globally.
Metals analyst William Adams at Basemetals.com said: 'The spread oncopper has widened further to $175 to $179 per tonne. Our overallconcern is that although the dollar may weaken further, especiallywith more economic data out today, sentiment for the base metalsmay suffer on the back of the falling equity markets as these aregiving out the message that economic hardship is on the cards andin that environment demand for metals is likely to suffer.'
U.S. personal income and spending figures, and core price indexdata is out at 1:30 p.m. BST, and could set the direction for theU.S. dollar in the short-term.
In other metals traded on the LME, aluminium continues to takesupport from record oil prices, with the energy-intensive metaloften boosted by rising fuel costs.
Aluminium is currently at $3,107 per tonne, basis three months,against $3,090 at the close on Thursday. Three-month lead edgedhigher to $1,825 per tonne against $1,810 per tonne, while nickelslipped to $21,800 per tonne from $21,850. Zinc was down to $1,946per tonne, basis three months, from $1,975 per tonne, while tin wasunchanged at $23,250.
d.sheppard@thomsonreuters.com
ds1/cml/ms1

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