Copper turned positive on Monday, as the euro strengthened on expectations a meeting of European finance ministers will offer more clarity on eurozone debt aid, but worries over slowing global economic growth capped gains. Benchmark copper on the London Metal Exchange finished at $8,840 a tonne from $8,790 at the close on Friday, when it bounced from Thursday's five-month low.
The metal used in power and construction fell to a low of $8,504.50 on Thursday from a record $10,190 a tonne hit on February 15, in a broader commodity price fall. "The market just for the past week has been reassessing fundamentals, after we had the major sell-off, and that is leading to some consolidation," analyst Christin Tuxen of Danske said.
Tuxen said that while a euro rebound was helping provide a boost for commodities, questions over global growth were likely to keep any sustained advance at bay ahead of a slew of US housing data this week. The euro extended gains against the US dollar on Monday on optimism that a meeting of European finance ministers will offer more clarity on eurozone debt aid.
Investors fear a slower economic growth in top copper consumer China would weigh on the metal's price. "Copper is trading bang in the middle of a new range at $8,500-9,000 a tonne now," said an LME ring trader. "I still think prices need to go lower. Demand is not that strong."
A stronger US currency makes dollar-priced commodities such as metals less affordable for holders of other currencies. Copper inventories in LME warehouses fell 1,450 tonnes to 467,075 tonnes, data showed on Monday. They still stand over 30 percent above levels early in December, fuelling concerns over slower consumption in China. Goldman Sachs, in a report dated May 13, raised its three-month price forecast for aluminium to $2,700 from $2,200, with prices boosted by cost pressures as well as improvement in Western manufacturing activity in the six months to end March.
"Spreads and physical premiums appear to have tightened substantially in recent weeks," it said. "Although strong demand... has contributed... we attribute recent strength largely to inefficiencies in out-loading warehouse inventory...rather than sustainable tightness in market balance."
Premiums for duty-paid physical aluminium in Europe have held around record highs, supported by the fact that much material is tightly-held and not available to the market, traders said In part this is due to a supply bottleneck where queues stretch as long as nine months to take delivery from some LME sheds in places like Detroit that are now bulging with stock.
LME stocks of aluminium hit a record at 4,687,925 tonnes, data showed on Monday. A tighter backwardation - premium for cash over three-month material - attracted hefty inflows of the metal and analysts expect more material will be delivered in the next few days. Aluminium ended at $2,547 a tonne from $2,565. Tin finished at $28,000 from $28,600 while zinc, used in galvanising, ended flat at $2,155. Battery material lead ended at $2,283 from $2,291 and stainless steel material nickel closed at $24,355 from $24,400.