Copper prices edge lower as U.S. dollar rebounds

LONDON, Feb 20 (Reuters) – Copper prices fell on Tuesday, pushed lower by a stronger dollar which made metals more expensive for holders of other currencies, but trading volumes were low with many Asian markets closed for the Lunar New Year holiday. Benchmark copper on the London Metal Exchange was down 0.6 percent at $7,076 a tonne at 1147 GMT, but still close to a four year high of $7,312.50 reached last month. “Copper has established itself above $7,000,” said ING analyst Oliver Nugent. “But we are still a bit bearish getting into second half of the year because we think supply won’t be as tight as some people think.” STOCKS: Copper stockpiles in LME-registered warehouses have risen to almost 340,000 tonnes from 200,000 tonnes in early January, suggesting plentiful supply. SUPPLY: Prices had been driven higher by expectations that labour strife at copper mines this year would reduce supplies, but early wage deals suggest these fears may be overblown. POSITIONING: Bets on higher prices have decreased, with the net long position of hedge funds and money managers in Comex copper dropping by two thirds since the start of the year. CHINA HOLIDAY: The Shanghai Futures Exchange will reopen after the Lunar New Year on Thursday, Feb. 22. DOLLAR: The dollar continued to rebound from three-year lows, recovering 1.5 percent since Friday on the view that a correction was due after a brutal sell-off. ALUMINIUM: LME aluminium was 0.1 percent lower at $2,211 a tonne but holding close to a 6-year high of $2,290.50 touched in January. SPREADS: The premium for cash aluminium over the three-month contract fell to $31.75 after touching $50, the highest since 2007.  The sudden surge in the premium was due to a shortage of available metal in LME warehouses as holders of aluminium sought to roll positions ahead of contract expiry this week, said ING’s Nugent.  “A lot of people want to roll, but there’s not a lot of on-warrant stock,” he said. Aluminium inventories in the LME warehouse system have declined to 1.3 million tonnes from almost 5.5 million tonnes in 2014, reducing the pool of metal readily available to the market and increasing the volatility of aluminium spreads. OTHER METALS: LME zinc was up 0.2 percent at $3,561 a tonne, nickel was 0.4 percent higher at $13,650 a tonne, lead was down 0.3 percent at $2,567.50 a tonne and tin had lost 0.7 percent to $21,400 a tonne.