Copper climbed on Monday, buoyed by a softer dollar and output disruptions in top world producer Chile. Three-month copper on the London Metal Exchange finished up less than half a percent at $9,135 a tonne from a close of $9,099 on Friday. There was no trade on the Shanghai Futures Exchange due to a one-day holiday in China.
"The base are a bit mixed, slightly firmer on the back of the dollar, but there is still that underlying tone of potential implications for demand after poor data of late," said analyst Daniel Major of RBS. "(But) prices haven't sold off that heavily ... so I think that's quite encouraging," he added. Friday data showed US payrolls rose by 54,000 in May, the softest reading since September, and the jobless rate rose to 9.1 percent from 9 percent in April.
The euro fell on Monday after a German official suggested a second Greek bailout was not yet certain, but traders said the prospect of higher eurozone interest rates would probably limit the currency's losses. Markets also were already bracing for European Central Bank President Jean-Claude Trichet on Thursday to signal plans to raise euro zone interest rates in July. "The currencies will continue to be important. I think the market is pricing a hike, but I don't see it pushing people out of commodities into potentially better yielding assets for the next few months at least," Major added.
A weaker dollar makes commodities cheaper for holders of other currencies. Falling ore grades, industrial disputes leading to production disruptions and a lack of big new mines are seen crimping mine supply in the medium term, providing a boost for copper prices. Codelco's El Teniente, Chile's fourth-biggest mine, was working at less than half of capacity on Monday as most staff workers stayed off the job for a third day to avoid violence by striking contractors, the company said.
El Teniente, which produces about 2.5 percent of the world's mined copper, or 404,000 tonnes a year, continued to work with a skeleton staff to keep production at 40 percent of capacity by processing stocked material. "This has given the bulls an excuse to buy. However, the overall impact on the copper market is likely to be minimal given the current well supplied nature of the concentrates market," Standard Bank said in a note.
LME copper inventories rose 2,225 tonnes to 475,700 tonnes, their highest in more than a year, data showed. "We still maintain the view that prices will retest recent lows in the short term before gaining a foothold in Q3 and rebounding through the second half of the year," RBC Capital said in a note. Attention is turning to China's copper import figures, which are due later this week and expected to show improvement. China is the world's top consumer of base metals.
Zinc ended at $2,272 a tonne, after hitting its highest since end-April at $2,315, from $2,258 a tonne. It ran into chart-based resistance at the 200 day moving average. Lead ended at $2,502 a tonne from a Friday close of $2,432, gains of nearly 3 percent. Traders put the market's performance down to volatility in thin trading, with the Chinese holiday draining volumes from the market.
Supply constraints and solid demand will push lead prices higher despite prospects a current crackdown on polluting battery-makers in top consumer China will hit consumption there in the short term. Tin, used in electronic solder, finished at $26,005 from $26,400 a tonne. Nickel closed at $22,630 from $22,800 a tonne and aluminium ended at $2,660 from $2,637 a tonne.