Copper slips

Copper fell about 1 percent on Wednesday, falling from a one-week high hit in the previous session as uncertainty about the outlook for demand from top consumer China weighed on sentiment, with a strong dollar adding pressure to base metals prices. Benchmark copper on the London Metal Exchange (LME) closed at $8,460 a tonne, down 1.2 percent from Tuesday's close of $8,560 a tonne after the metal used in power and construction hit a one-week high of $8,608.74 during that session.
Prices struggled to break above $8,600 on Wednesday, the top of a range copper has held this month, as concerns lingered about a weak recovery in demand in China, which accounts for 40 percent of global copper consumption. The cautious tone regarding policy loosening in comments by China Premier Wen Jiabao dampened expectations of imminent policy easing for the property sector, a key copper consumer.
Federal Reserve chairman Ben Bernanke on Tuesday also quashed hopes of another round of quantitative easing in the United States. "The key event this week is people scaling down expectations of quantitative easing. Bernanke's speech yesterday made it less likely. The US economy has been steadily recovering so they don't need it now," said Andrey Kryuchenkov, analyst at VTB.
"Copper inventories are dwindling, cancel led warrants are amazingly resilient and premiums are up in Europe, but you still need that fundamental Asian push which we have not seen yet." Copper has gained more than 11 percent this year, partly buoyed by hopes demand from China would pick up after the Lunar New Year, with recent inflation data boosting hopes policymakers could take further steps in easing monetary policy.
But demand from the commodity-consuming giant has remained weak, raising worries that copper prices could retreat sharply. "Demand is recovering, but remains soft," Standard Chartered said in a research note.
"Copper, aluminium, lead and zinc trading firms reported increasing business flows since end-February, but at a very slow pace. The magnitude of recovery is significantly lower than the comparable period last year." Adding to falls was a rise in the dollar to a one-month high against the euro, after the US Federal Reserve on Tuesday provided few clues on the prospects for further monetary easing.
The central bank offered just a slight upgrade to its economic outlook while restating concerns about the high level of unemployment. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies. On the supply side, heavy rains in northern Chile have cut off roads at No 3 copper mine Collahuasi and Cerro Colorado, but operations have been little affected, worker and company sources said on Tuesday.
Benchmark tin closed at $23,800 a tonne from Tuesday's close of $24,250, following a rise of more than 3 percent on Tuesday, since Indonesia's Koba Tin began loading a 280-tonne shipment after demonstrators blocked the producer's exports this week over a pay dispute.
Aluminium ended at $2,229 from Tuesday's close of $2,258, and zinc at $2,074 from $2,110. Lead finished at $2,102 from a close of $2,154 on Tuesday and nickel at $19,575 from $19,450.
China's consumption of refined lead has risen this month because of higher output of lead-acid batteries, manufacturers of which are the country's top users of the metal, while industry sources see demand rising in the next three months. A monthly bulletin from Lisbon-based International Lead and Zinc Study Group (ILZSG) showed the global lead market was in surplus by 9,700 tonnes in January, while the global market for zinc was in surplus by 22,400 tonnes in January.