London - Copper fell on Tuesday as the dollar rose and as China inflation data reinforced worries about slowing growth in the world's top copper consumer, though risk appetite in the wider markets and oversold conditions kept losses in check.
Copper, down nearly 15 percent this year, fell on Friday after strong US jobs data bolstered concerns that the Federal Reserve could start winding down its stimulus programme as early as September.
After steadying on Monday, the metal resumed its downtrend after data from China showed its annual consumer inflation accelerated more than expected in June, and as the dollar rose towards recent three-year highs versus a basket of other currencies.
A strong dollar makes dollar-priced metals more expensive for non-US investors.
Three-month copper on the London Metal Exchange traded at $6,728 a tonne in official midday rings, down 0.90 percent. Copper has struggled to get any traction after inching away from a three-year low of $6,602 a tonne hit on June 25.
“The Chinese CPI reduces the likelihood of China doing more stimulus,” said William Adams, head of research at BaseMetals.com.
“We're moving into a market surplus and copper is well above the cost of production. Overall I'd be neutral to bearish for copper but a lot of negative news has been priced in and that might prompt short covering (in the near term),” he added.
Also weighing on copper, Freeport McMoRan Copper & Gold Inc FCX.N has resumed copper concentrate shipments from its mine in Grasberg, Indonesia, after a near two-month stoppage caused by a tunnel cave-in that killed 28 people, Bloomberg reported.
Also, copper concentrate shipments to China from Mongolia's giant Oyu Tolgoi mine began on Tuesday. The mine is expected at full tilt to produce around 450,000 tonnes of copper.
In the wider markets, world shares extended gains, spurred by a good start to the US earnings season and by a deal to drip-feed Greece the latest 6.8 billion euro instalment of its bailout.
But the optimism had yet to help copper, with investors still nervous ahead of a slew of China data expected to show growth is grinding towards a 23-year low. Chinese trade numbers are due on July 10 and GDP on July 15.
HEADWINDS
Deutsche Bank analysts said in a note they believed that expectations regarding the Federal Reserve reining in its bond buying along with dollar strength could sustain headwinds for industrial metals, though noted speculative net shorts in copper are at all-time high.
“We expect China's copper imports to recover modestly,” the note said.
China's imports of copper likely extended gains in June from a month ago as falling prices spurred purchases, traders said. But slowing growth means shipments for the first six months of 2013 probably stayed in the red.
In other metals traded, tin traded down 0.26 percent in rings to $19,4000 a tonne, while nickel traded down 1.38 percent to $13,245 a tonne, having hit a fresh four-year low at $13,230 as LME stocks remained near a recent record high of 193,776 tonnes.
Refined tin shipments from Indonesia, the world's top exporter of the metal, rose 20 percent in June to 11,111.38 tonnes, from 9,242.05 tonnes in May, a trade ministry official said.
Aluminium traded down 1.00 percent to $1,785 a tonne.
Alcoa Inc, the largest US aluminium producer, still sees global demand for aluminium products growing 7 percent this year, signalling a potential price rise for the metal as bulging Chinese aluminium inventories begin to dwindle.
Meanwhile, the French government hopes to conclude this week the sale of an aluminium plant owned by Rio Tinto, Industry Minister Arnaud Montebourg said.
Zinc was last bid down 1.12 percent at $1,859 a tonne in rings, while lead was last bid down 1.21 percent at $2,046 a tonne. - Reuters