MELBOURNE: London copper and nickel slipped on Wednesday after a US housing report pushed up the dollar and sparked profit-taking across the two metals, with copper also hit by evidence of mounting supply.
US housing starts rose more than expected in June as construction activity increased, sending the dollar to a four-month top. A stronger dollar dampens purchasing power of commodity buyers paying with other currencies.
Copper has been the worst-performing commodity so far this year, Barclays said in a research note, adding that there were few reasons to expect any change with modest surpluses expected out to 2020.
"This is largely due to strong supply growth in 2016-17 as the last of the big growth projects reach fruition combined with anaemic demand," it said.
Three-month copper on the London Metal Exchange fell 0.7 percent to $4,950 a tonne by 0734 GMT, following a gain in the previous session.
Shanghai Futures Exchange copper pared early gains of more than 1 percent to end at 38,280 yuan ($5,724) a tonne.
China's copper output was steady on the year in June, though it rose 7.6 percent to 4.03 million tonnes in the first half of 2016 from a year ago, government data showed on Wednesday.
"Copper got sold quite hard - could be related to lower mining costs and also the news of Chinese output today," said a metals trader in Singapore.
Chilean copper mine Collahuasi said it cut costs 23 percent in the first half of the year, while raising output 12.6 percent.
BHP Billiton also said its output from the giant Escondida mine in Chile rose to 979,000 tonnes in fiscal 2016, beating guidance in April of 940,000 tonnes.
LME nickel fell by 1.5 percent to $10,400 a tonne, having hit its highest since October at $10,670 last week.
Nickel has surged by around ten percent this month on fears that a crackdown in the Philippines would crimp supply to China, top user of the metal.
However, the impact of the crackdown may be limited, said Macquarie, with suspended mines accounting for less than 10 percent of its projected 2016 Philippines' mine output.
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