Copper falls back from record on easing worries

Copper fell from a record high on Tuesday after manufacturing data from around the world flagged economic improvement and speculation rose of a possible roll back of easy monetary policy for the new year. London Metal Exchange benchmark copper for delivery in three months closed at $9,580 a tonne, down from Friday's closing ring trading bid of $9,660.
The metal used in power and construction had earlier reached a record $9,754 a tonne. Other metals rose, with nickel touching its highest since May at $25,300 a tonne and lead hitting its highest since mid-November at $2,610. Much of the last year's rally had been on the back of expectations of almost limitless liquidity, said BNP Paribas analyst Stephen Briggs.
"If that's withdrawn a bit then perhaps there's a little less appetite for risky assets," he said. "Things have gotten overcooked... the dollar has also turned around.. they were overdue for a correction." A stronger dollar makes commodities more expensive for holders of other currencies.
The latest data out from the United States manufacturing sector further brightened the economic picture for the world's top economy as November factory orders rebounded from a contraction in October. Earlier this week, data showed manufacturing US and Europe accelerated in December, while growth in China and India slowed to more sustainable levels in another boost for the global economic outlook.
"The data was stronger than expected...we will continue to see strong industrial metals prices as the global economy continues to recover strongly from 24 months ago," said analyst Robin Bhar at Credit Agricole. Copper is widely expected to build on its nearly uninterrupted rally in the second half of 2010 as ore grades decline, new mines remain scarce and top buyer China grows.
The world's No 3 copper mine, Chile's Collahuasi, has restarted exports via an alternative port. But deliveries are not yet enough to lift a two-week-old force majeure, prompted by an accident at the mine's main sea terminal, that has rattled metal markets.
"The undertone is still pretty much bullish and the market has begun the year with some tail-wind," a trader said. Copper has been benefiting from a tightening market, where stocks in LME warehouses have tumbled more than 30 percent since the middle of February last year. However latest data showed LME stocks rose 125 tonnes to 377,675 tonnes.
Lead inventories rose 275 tonnes to 208,550 tonnes, coming close to their May 2000 peak of 208,650 tonnes. Lead closed at $2,609 a tonne versus Friday's close of $2,560. Canadian-listed miner Ivernia Inc has been ordered to halt lead shipments by the Western Australian government from the firm's Magellan mine after airborne lead was detected in shipping containers. That gave some support to prices but high lead supply and LME stocks capped gains.
"Investors were worried because exports from the Magellan mine were halted for a really long time two years ago," said Bhar. "But there is no shortage of lead supply and LME stocks are abundant." The death of thousands of birds in the port of Esperance from lead poisoning in March 2007 resulted in a 2-1/2 year halt in exports from the mine, which is expected to produce 85,000 tonnes of metal equivalent to around 2 percent of global mine production of the metal.
Nickel changed hands last at $25,155 a tonne from $24,950. "It's pretty much tracking other higher metals, rather than there being specific fundamental news," a second trader said. Aluminium closed at $2,485 versus Friday's close of $2,467 a tonne. It rose to $2,495 earlier, just $5 short of two-year highs at $2,500 from November. Zinc ended at $2.470 up from $2,440. Tin finished at $26,350 a tonne versus $26,870. It is nearing record highs of $27,500 from November 9.