Wednesday May 14, 04:14 PM
Metals - Copper, base metals fall as firm dollar triggers liquidation
LONDON (Thomson Financial) - Copper fell to a seven-week low in afternoon trade, reflecting weakness across the base metals, as the firmer dollar continued to trigger bouts of long liquidation.
The red metal has also been pressured
by production statistics released by China's National Bureau of Statistics, which showed output of refined copper rose 22.7 percent in April to 329,400 tonnes, analysts said.
'The dollar is stronger today, taking its toll on precious and base metals,' said MF Global analyst Ed Meir. 'Chinese production data for the various metals for the month of April were released earlier -- these show solid month-over-month and year-to date gains.'
At 3:49 p.m., London Metal Exchange copper for three-month delivery was trading at $8,130 per tonne against $8,240 at the close on Tuesday. Earlier it touched an intraday low of $8,055 per tonne, its weakest level since March 25.
Buying has been muted since better-than-expected U.S. retail sales data and comments from Fed chief Ben Bernanke that suggested the turmoil in the financial markets has eased allowed the dollar to move higher overnight.
A stronger greenback makes dollar-priced commodities such as the industrial metals more expensive for holders of other currencies.
Although a more positive economic picture is likely to benefit metals demand in the long term, the stronger currency is weighing on the market for the moment.
Zinc remained relatively steady as losses were limited by expectations supply could be threatened by damage to infrastructure in southwest China.
Some 60,000 people are missing after an earthquake of 7.9 magnitude struck the area early Monday morning.
Sichuan province, the epicentre of the quake, was the source of 5.5 percent of China's refined zinc production, as well as 10 percent of its lead mine output and 4.1 percent of primary aluminium supply last year, analysts said.
Estimates suggest up to 500,000 tonnes of zinc smelter capacity could be lost to the quake, albeit temporarily. Zinc for delivery in three months was trading at $2,305 against $2,320.
However, until the picture is clearer, the metals are unlikely to move higher on the news, although losses will be limited, analysts said.
'Prices may be supported by the disruptions, but damages would have to be very serious -- which doesn't seem to be the case -- to cause a sustained impact on metals quotations,' said Lehman Brothers (NYSE: LEH - news) analyst Michael Widmer.
Lead and aluminium were also taking a little support from supply fears linked to the earthquake. Lead was trading at $2,270 per tonne against $2,315 per tonne at the close on Tuesday, and aluminium was flat at $2,948 per tonne against $2,945.
Among other metals traded on the LME, tin rose to match yesterday's all-time high of $25,350 a tonne, before easing back to trade at $21,150, unchanged from the Tuesday's close.
Fears lower supplies from major producers China and Indonesia will lead to market tightness later this year have propelled tin prices to a succession of new highs in recent months.
Elsewhere nickel slipped to $26,731 from $27,050.
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