Copper hit its lowest in nearly two weeks on Monday as a strong dollar and a plunging gold price weighed, but it recovered to end flat as investors digested upbeat data from China and gains in Chinese and US equities. The dollar jumped to three-month highs as expectations of a US rate rise gathered pace, though it later gave back its gains. Gold slumped to a more than five-year low as sellers in China offloaded the metal.
A strong dollar makes dollar-priced metals costlier for non-US investors. "Over the summer, corporate activity goes into abeyance which means the market will tend to follow more fund-related macro queues. If it's focusing on the dollar, that suggests prices are going to struggle," Citi analyst David Wilson said. "I still think fundamentally copper is not actually looking too bad but macro issues are driving everything short-term."
Three-month copper on the London Metal Exchange ended flat at $5,480 a tonne. It earlier touched $5,429, its lowest since July 8, when prices hit a six-year low of $5,240 a tonne. Weighing on the metal, LME inventories are at 339,775 tonnes, up about 90 percent from levels seen in January. Shanghai Futures Exchange inventories have fallen for the last two weeks.
On the upside, home prices in China rose in June for a second month in a row, while Chinese equities ended higher on Monday after the country's securities regulator reaffirmed its support for the market. "Some improvement in Chinese metals and mining demand can be expected in the coming months, from a low level, on the back of recent policy easing," Goldman Sachs said in a note. "However, anything less than a substantial pick-up is unlikely to be sufficient to balance metals markets such as copper."
Tin ended down 1.5 percent at $15,550 a tonne, after matching Friday's peak of $15,800, which was the highest since late May. Cash tin prices traded at a premium of $60 a tonne to the three-month price, their highest since May 2014, though Citi's Wilson said an apparent lack of nearby supply looked somewhat artificial. Aluminium ended down 1.1 percent at $1,689 a tonne. Aluminium output in top producer China surged to a record in June, industry data showed. Zinc was last bid down 0.7 percent at $2,052 a tonne and lead ended down 1.6 percent at $1,814. Nickel bucked the trend, ending up 1.7 percent at $11,700 a tonne. "With nickel ore supplies running low, there may be some short-covering setting in but again the best it can do is consolidate. Commodities are not in a good state," an LME broker said.