Copper slips to two-week lowComment on this story
Copper prices fell on Tuesday to a two-week low, dragged down by a slight rebound in the dollar against the euro, with uncertainty about the outlook for demand from top consumer China also weighing on prices.
Three-month copper on the London Metal Exchange was untraded in official rings, and was bid at $7,970 a tonne, down from Monday's close of $8,000 in its third straight session of falls. The metal earlier fell to a two-week intraday low at $7,955.
Benchmark aluminium, zinc and lead also dropped to multi-week lows, mirroring falls across the base metals complex.
The dollar bounced against the euro, recovering from an 11-month low hit after US Federal Chairman Ben Bernanke urged US lawmakers to lift the country's borrowing limit to avoid a potentially disastrous debt default.
A stronger dollar makes commodities priced in the US unit more expensive for holders of other currencies.
The market's focus remains on the outlook for demand from top consumer China, with Chinese buying likely to remain subdued as businesses wind down ahead of the Lunar new Year holiday in February.
China accounts for as much as 40 percent of global copper demand.
“The Chinese have been pretty absent from the market and I think that is sending a signal that they're not participating at these levels and they don't need to either because stock levels are comfortable in China for most of the base metals,” said Gayle Berry, analyst at Barclays.
“They're probably going to stay absent from the market until the Chinese New Year and we are not likely to see any big buying sprees ahead of that. That ultimately is what is being a drag on markets.”
The metal used in power and construction, which gained more than 4 percent in 2012, hit its highest level in more than two months earlier in January following a deal by US lawmakers to avoid a “fiscal cliff” of spending cuts and tax increases.
But prices have since retreated on expectations the US Federal Reserve may rein in easing measures sooner than expected and caution ahead of upcoming US debt ceiling negotiations.
The market will also closely watch China's economic growth figure due later this week, which is expected to have quickened to 7.8 percent in the fourth quarter, according to a Reuters poll.
“We think commodity prices are likely to rise further in the coming days. This week's release of Chinese GDP and industrial production data are key event risks due on Friday,” said Credit Suisse in a note.
In industry news, global miner Rio Tinto, one of the world's top three aluminium makers, said it produced 10 percent less primary aluminium in 2012 versus 2011 due to a labour dispute.
Its bauxite and alumina production, both raw materials for aluminium, however, grew 11 percent and 12 percent respectively, driven by increased third party demand, it said in its production report.
Three-month aluminium was untraded in official rings, bid at $2,040 a tonne from Monday's close of $2,052. It earlier fell to a 1-1/2 month low at $2,033 a tonne.
Zinc, used in galvanising, also hit a 1-1/2 month low at $1,982. It was untraded in official rings, and bid at $1,981.25 from a last bid of $1,996 on Monday.
Battery material lead fell to a one-month intraday low at $2,262.75 a tonne. It traded at $2,266 in official rings, from $2,295 on Monday.
Soldering metal tin was also untraded in rings, and bid at $24,800 from Monday's close of $24,750 while stainless steel ingredient nickel traded at $17,200 from $17,255. - Reuters