* Dollar index up slightly near 2-week high
* Copper on track for first monthly fall since June
* China copper output rises 21 percent in September
By Harpreet Bhal
LONDON, Oct 31 Copper fell on Thursday on a
strong dollar after the U.S. Federal Reserve's latest policy
outlook turned out to be less dovish than some had expected,
while growing supply and weak demand also weighed on the outlook
for the metal.
Benchmark copper on the London Metal Exchange closed
at $7,250 a tonne, down from a close of $7,289 on Wednesday.
Copper has traded in a $7,000-$7,420 range since early
August due to swelling supply and slower demand growth in China
and is on track to post its first monthly fall since June.
"We're in a market where the fundamentals are not giving a
particularly strong price signal. That's why we are seeing
prices meandering in this range," Gayle Berry, an analyst at
"If we saw copper trading below $7,000, we could see a lot
more investor participation, but at these levels the risk/reward
of buying copper is not attractive as there is a lack of factors
that can take prices much higher."
The dollar rose, as the euro fell, after the Fed kept its
options open for tapering its bond buying.
The central bank kept its $85 billion-a-month stimulus plan
intact but did not sound quite as alarmed about the state of the
economy as some had anticipated.
The Fed's bond purchases have buoyed commodities over the
past few years by driving liquidity towards the asset group.
Expectations for rising supply were also hurting the outlook
for copper prices.
Analysts polled by Reuters this month expected the copper
market to post a surplus of 182,000 tonnes this year, up from a
previous forecast of 153,000 tonnes, and then balloon to 328,000
tonnes in 2014.
In China, copper output jumped by 21 percent to around
620,000 tonnes in September from a year ago.
Reflecting rising uncertainty about copper's prospects,
hedge funds and money managers cut their bullish bets in copper
futures and options in the week ended Oct. 15, a delayed report
by the U.S. Commodity Futures Trading Commission showed on
In industry news, Glencore Xstrata beat market
forecasts with copper output that rose over a third in the
quarter, boosted by improvements in its Congolese and Chilean
mines, as metals helped its trading arm perform in line with its
BHP Billiton's Leinster nickel mine in Western
Australia was hit by a small earthquake early on Thursday, and
all workers have been brought out from the underground mine
safely, the company said.
Aluminium closed at $1,859 from a last bid of $1,892
on Wednesday, and zinc at $1,952 from a last bid of
Lead closed at $2,185.50 from a close of $2,209, and
nickel at $14,630 from a close of $14,750 on Wednesday.
Tin, untraded at the close, was bid at $22,850 from
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