Copper fell 1 percent on Monday, as worries about sovereign debt in Europe curbed risk appetite, and lower buying activity from top consumer China sapped upward momentum. Copper for three-months delivery on the London Metal Exchange finished at $9,321, down from a close of $9,425 on Friday. But the metal used in power and construction remained within reach of a record high of $9,754 a tonne hit last week.
Copper was on the back foot as concerns over Portugal debt blunted appetite for risky assets such as commodities, and sent the dollar up temporarily against the euro, said Merrill Lynch-Bank of America analyst Michael Widmer. "The stronger dollar is part of it. But a lack of Chinese buying in the past few weeks has also curbed the upside for copper. We need to see more activity there...that is what (investors) are waiting for," he said.
China is the world's top consumer of base metals. Relieving some pressure, the euro came off a four-month low against the dollar it hit earlier on Monday on worries about Europe's debt crisis. An appreciating dollar makes metals more expensive for holders of other currencies. China's copper imports fell 2 percent on the month in December but the inflow in 2010 managed to reach a new record high, a feat that may be repeated in 2011, market watchers said.
Zinc was set to experience the largest amount of buying of around 150,000 tonnes, equivalent to some 15 percent of monthly consumption, Macquarie said in a research note. Nickel was to see the largest amount of selling of some 12,000 tonnes, or about 10 percent of monthly consumption, the note said, adding slightly over 100,000 tonnes of aluminium should be bought, while copper may be sold this week. However, a large build of aluminium into LME warehouses pressured prices, as stocks climbed nearly 100,000 tonnes, their biggest daily jump since May 2009.
Among providers said to be planning a launch of aluminium backed securities are Credit Suisse, UK-based ETF Securities and Russian producer UC RUSAL. Aluminium finished at $2,488 a tonne from $2,518 on Friday. Zinc, fell more than 3 percent at one point, ending at $2,379 a tonne from $2,445, battered by systems-based fund selling, a trader said. These funds use algorithms and chart patterns for signals - rather than fundamentals - to buy or sell.
Battery material lead closed at $2,586 a tonne from $2,649 while tin was untraded but bid at $26,250/26,300 from $26,450. Indonesia's refined tin exports fell 9.2 percent in December 2010 to 7,722.01 tonnes from 8,508.36 tonnes a year earlier, trade ministry data showed. Nickel finished at $23,875 a tonne from $24,200.
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