Copper recovers, but prices still down 10% since February

Copper edged up on Tuesday as the dollar fell against the euro with investors betting European leaders will cobble together a deal to prevent Greece from defaulting but concerns about demand prospects remained.

Benchmark copper on the London Metal Exchange was up to US$9,045.50 a tonne by 0936 GMT, paring losses after falling nearly 1% to US$9,005 in the last session.

The metal used in power and construction was still more than 10% down from Feb. 15, when it hit a record high of US$10,190 a tonne.

Inventories of copper in the London Metals Exchange rose to 472,825 tonnes but were 1.3% down from Jun. 9, when they hit a more-than-one-year high at 477,925 tonnes.

“We expect inventories… to decline throughout (the third quarter), supporting historically strong pricing,” said RBC capital in a note.

“We forecast a deficit in 2011 for a second year in a row and for inventories to finish the year below critical levels.”

Aluminium was trading at $2,543.50 from $2,531 at the close on Monday. The metal used in packaging and transport fell by about 10 percent since May 3, when it hit a 9-month high of US$2,803 but was still more than 2 percent up from the beginning of this year.

“We think that the recent drop in aluminium prices relates to economic uncertainties due to the Greek debt crisis and (higher) oil prices, but we think that this is just a temporary blip,” said Kamil Wlazly, metals analyst at MetalBulletin Research, adding he expected aluminium prices to rise to US$2,650 in the third quarter as fundamentals remained supportive.

Zinc, used in galvanizing steel was at US$2,198 from US$2,172 Monday’s close.

Battery material lead was at US$2,459 from US$2,450 and tin was at US$25,100 from US$24,800.

Nickel was at US$21,805 from US$21,650.