* Trading volumes low as hurricane hits the U.S.
* Aluminium stocks rise as output grows quicker than demand
* Euro rises vs dollar on good demand at Italian debt
By Silvia Antonioli and Harpreet Bhal
LONDON, Oct 30 Copper rose on Tuesday,
rebounding from a near 2-month low hit in the previous session,
supported by a weak dollar and some cautious industrial buying,
but concerns about sluggish demand from top consumer China
capped further gains.
Three-month copper on the London Metal Exchange
(LME) closed at $7,720 a tonne, recovering from a near 2-month
low of $7,670 on Monday, when it closed at $7,699.
Trading volumes were low however, as Sandy, one of the
biggest storms ever to hit the U.S., forced evacuations and shut
Boosting metals prices was a rise in the euro against the
dollar, after data showed the Spanish economy contracted
slightly less than expected in the third quarter and as demand
for Italian bonds improved at an auction.
A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies.
With prices of most metals near 2-month lows on Monday, some
industrial buyers had been tempted, traders and analysts said.
"We are seeing a bit more buying interest from consumers at
this sort of price levels but we still see copper physical
demand as relatively soft," Standard Chartered analyst Daniel
"I don't think demand in China has got any worse, but people
are recognising that growth in quite soft. Realism is starting
to sink in."
Prices for the metal rallied nearly 8 percent in September,
fuelled by the third round of quantitative easing (QE) by the
U.S. Federal Reserve, the promise of bond buying by the European
Central Bank (ECB) and stimulus measures in Japan and China.
Copper then weakened in October as expectations that real
demand for metals would improve failed to materialise. It is
down close to 6 percent in October and is trading up just 1.7
percent in the year to date.
Fundamentals have turned a bit weaker for base metals, as
slower economic growth in China weighed on its metals demand,
and with metals stocks rising, especially for aluminium and
Benchmark aluminium closed at $1,909, from $1,897 on
Stocks of aluminium in warehouses monitored by the LME and by the Shanghai Futures Exchange
(ShFE) have built up significantly in the last few
Bonded stocks of aluminium in China have also increased
noticeably, a trend which is not likely to reverse anytime soon
as new smelters bring additional capacity on stream, analysts
"The rise in stocks is due to the pace of growth in local
production significantly outstripping the pace of growth in
demand," Commerzbank said in a research note.
Hurt by low prices for aluminium and rising costs, China's
top aluminium maker Aluminium Corp of China Ltd, Chalco< posted
its fourth straight quarterly net loss in the third quarter.
Battery material lead ended at $2,042 a tonne from
Monday's close of $2,007.50.
Lead backwardation, or premium of the cash contract
against the three-month contract, widened to $4 per tonne from
$0.5 on Monday, as battery makers sought scarce supplies of the
metal ahead of the peak winter battery replacement season.
Tin ended at $19,800 from $19,555 while zinc
ended at $1,855 from $1,825. Stainless steel material nickel
closed at $16,050 from $15,950.