(Updates with official prices)
LONDON, Sept 29 (Reuters) – Copper eased on Tuesday as inventories in London Metal Exchange registered warehouses jumped and the dollar’s recent gains weighed on prices as the market waited for key manufacturing data from top consumer China.
Benchmark copper on the LME was down 0.2% at $6,558 a tonne in official rings. Prices of the metal used widely in power and construction are down nearly 5% since hitting a 27-month high at $6,877.50 earlier this month.
“The higher dollar persuaded some funds to take profits on long copper positions and the deliveries (of copper to LME warehouses) reinforced the selling,” a copper trader said.
DOLLAR: A higher U.S. currency makes dollar-denominated metals more expensive for consumers using other currencies, which could subdue demand.
This relationship is used by funds that trade using buy and sell signals generated by numerical models.
DATA: Surveys of purchasing managers in China’s manufacturing sector, particularly the new and export order components, due on Wednesday, will be scrutinised for clues on demand growth for industrial metals.
China’s home prices are expected to rise slightly more this year than expected, though at a slower pace than last year, as Beijing shifts to de-leverage the sector amid an economic recovery, a Reuters poll showed.
INVENTORIES: Copper stocks in LME warehouses at 136,325 tonnes MCUSTX-TOTAL are up more than 40% since falling to 76,325 last week, the lowest since December 2005 and cancelled warrants — metal earmarked for delivery — have fallen to 30% from near 60% last week.
The deliveries have eased concern about supplies on the LME market and the premium for the cash over the three-month copper contract CMCU0-3 is now a discount.
TECHNICALS: Upside resistance for copper comes in at the 21-day moving average currently sitting at $6,645. It has struggled to hold above the 50-day moving average currently at $6,475.
OTHER METALS: Aluminium was up 0.3% at $1,780 a tonne, zinc fell 0.1% to $2,429.5, lead rose 0.6% to $1,845, tin gained 0.3% to $17,395 and nickel climbed 0.1% to $14,512 a tonne.
Reporting by Pratima Desai; editing by Louise Heavens and Jane Merriman