Copper (HG-FT) fell on Tuesday as the U.S. dollar recovered and investors saw a rise to 13-1/2 month highs in the previous session as overdone given continuing stockpile gains.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $6,795 (U.S.) a tonne at 1026 GMT, after surging 5.1 per cent to close at $6,855 on Monday, a level not seen since late September 2008.
“Yesterday's jump was a little bit overdone, there are still wider economic concerns. We've seen builds in (copper) stocks since the middle of the year but it's had no impact on price,” said David Wilson, analyst at Societe Generale.
“The market is picking and choosing what it decides to take notice of, it's entirely sentiment driven,” he added.
The U.S. dollar inched off 15-month lows on Tuesday, making dollar-priced metals more expensive for non-U.S. investors. Also weighing on copper, equities, seen as a proxy for economic growth, retreated from 13-month highs in Europe. But overall sentiment remained upbeat, with funds who have helped drive copper up more than 120 per cent this year still pinning their hopes on a revival in demand for raw materials next year.
On Monday, U.S. retail sales data came in better than forecast, reinforcing the view that the global economic recovery is gathering pace and boosting metals demand prospects.
But current demand for copper remains lacklustre. Latest data showed LME copper stocks jumped 3,550 tonnes to total 410,000 tonnes, their highest since late April.
“Base metals are quite fully valued, with investors pricing in bullish assumptions for the international economy,” said David Moore, commodity strategist at Commonwealth Bank of Australia. “At some point, we'll see some pullback in prices.”
Among other industrial metals, aluminum (AL-FT) , used in transport and packaging, edged up to $2,037.25 a tonne from $2,030, having earlier hit $2,043, a level not seen since mid-August.
Latest data showed LME stocks jumped 23,300 tonnes to total 4.56 million tonnes, reversing a recent trend of stockpile falls away from record levels and indicating still weak demand for the metal which is widely used to make vehicles.
“For aluminum you've seen a massive build, mostly in Detroit, which has got to be indicating that autos are beginning to struggle now that cash for clunkers has come to an end,” said Mr. Wilson.
He added, however, that aluminum, like most other base metals, was not being driven by fundamental factors at the moment.
Elsewhere, stainless steel-making ingredient nickel, the worst performing metal in recent weeks, was at $16,675 a tonne from $16,800.
Depressing prices, China's state-backed research group Antaike said growth of real nickel consumption was expected to slow to 5.1 per cent next year after a 37.6 per cent surge this year as the stainless steel market digests stocks.
Also weighing on nickel, latest data showed LME nickel stocks jumped 1,032 tonnes to total 132,912 tonnes, their highest since early 1995.
Zinc was at $2,240 a tonne from $2,279, underpinned by news that Australia's Century zinc mine will run out of concentrate at its shipping port later on Tuesday.
Tin was at $14,800 a tonne from $14,985, while battery material lead was at $2,353 from $2,390.
