Copper edges lower as US dollar rebounds

LONDON — Copper prices fell on Tuesday, pushed lower by a stronger dollar which made metals more expensive for holders of other currencies, but trading volumes were low with many Asian markets closed for the Lunar New Year holiday.

Benchmark copper on the London Metal Exchange (LME) closed down 0.40% at $ 7,090 a ton, remaining close to the fouryear high of $ 7,312.50 reached last month.

“Copper has established itself above $7,000,” said ING analyst Oliver Nugent. “But we are still a bit bearish getting into second half of the year because we think supply won’t be as tight as some people think.”

Copper stockpiles in LMEregistered warehouses have risen to almost 340,000 tons from 200,000 tons in early January, suggesting plentiful supply.

Prices had been driven higher by expectations that labor strife at copper mines would reduce supplies, but early wage deals suggest these fears may be overblown.

Bets on higher prices have decreased, with the net long position of hedge funds and money managers in Comex copper dropping by two thirds since the start of the year. The Shanghai Futures Exchange will reopen after the Lunar New Year on Thursday, Feb. 22.

The dollar continued to rebound from three-year lows, recovering 1.5% since Friday on the view that a correction was due after a brutal sell-off.

LME aluminum finished 1.3% lower at $2,186 a ton, holding close to a six-year high of $2,290.50 touched in January.

The premium for cash aluminum over the three- month contract fell to $31 after touching $50, the highest since 2007. The surge in the premium was due to a shortage of available metal in LME warehouses as holders of aluminum sought to roll positions ahead of contract expiry this week, said ING’s Mr. Nugent.

Aluminum inventories in the LME warehouse system have declined to 1.3 million tons from almost 5.5 million tons in 2014, reducing the pool of metal readily available to the market and increasing the volatility of aluminium spreads, Mr. Nugent said.

Among other base metals, LME zinc ended down 0.10% at $ 3,550 a ton, nickel finished 0.10% higher at $ 13,610, lead gained 0.90% to $2,598 and tin did not trade but was bid 1% lower at $21,350.