Copper and aluminium recover on dollar

Copper and aluminium recovered from recent losses on Thursday as the dollar weakened against the euro and optimism grew over a Greek debt deal, but some analysts were cautious over whether gains could be sustained due to plentiful supplies. Most other base metals also rebounded from a recent downturn that had been partly due to a stronger dollar, which makes commodities priced in the US currency more expensive to buyers using other currencies.
The euro has gained against the dollar after Greece expressed confidence this week it will soon seal a cash-for-reforms deal. "We've had a bit of a bounce this morning. One of the reasons is because the dollar has stopped appreciating, in the short term at least," said Stephen Briggs, metals strategist at BNP Paribas in London. A trader said some investors were buying to take profits from short positions after the recent down-swing.
Three-month copper on the London Metal Exchange closed up 0.3 percent to $6,095 a tonne. On Wednesday copper touched its lowest since April 29 at $6,075.50 a tonne. While LME copper stocks have declined about 5 percent over the past two months after rising earlier in the year, Briggs said he believes the trend will soon change.
"I think the copper market is in an underlying surplus and you'll start to see a pick up in LME stocks over the summer months, which could put some downward pressure on the price." There was also concern about demand tapering off after the second quarter, when metal consumption is typically strongest. But a series of infrastructure announcements from Beijing, along with policy stimulus, could yet underpin metals demand into the second half, said Morgan Stanley analyst Joel Crane in Melbourne.
"Given the high level of announcements, should they translate into new starts of infrastructure, that will definitely be a boost for broad metals demand - aluminium in transport, copper in power for urbanisation and rural upgrades." Aluminium gained 2.2 percent to finish at $1,776 a tonne after hitting the lowest level in more than a year on Wednesday on worries about rising output. Zinc closed up 1.9 percent at $2,228 a tonne and lead climbed 2.1 percent to end at $1,990. Nickel edged down 0.1 percent to end at $12,820 a tonne after hitting one-month lows in the past week, while tin slipped 0.2 percent to $15,575.