Aluminium lifts, but copper is flat

Aluminium has hit its highest in a week as speculators closed out bearish positions before the weekend, but it pared gains and other metals dipped as the US dollar rebounded.

The US dollar has been buoyant after Federal Reserve officials said this week there was growing potential for higher interest rates given strong economic data.

"It's been a macro-driven week and we're probably seeing some profit-taking today," said Caroline Bain, senior commodities economist at Capital Economics.

"The Fed minutes shook things up a bit, potentially making the case for a June rate hike, which is negative for all commodities."

Three-month aluminium on the London Metal Exchange closed up 0.1 per cent at $US1,547 a tonne, reeling back after touching $US1,577, the highest since May 12. It added nearly one per cent for the week, breaking two weeks of declines.

Aluminium had support from data showing owners of 74,425 tonnes of metal in LME-registered warehouses gave notice they were preparing to ship the material out.

This meant less material available for buyers, tightening up the market, traders said.

Curbing the metals markets, however, were further gains in the US dollar index, which edged up on Friday after US home resales rose more than expected in April, close to three-week highs hit on Thursday.

Dollar-denominated commodity futures tend to drop when the greenback gains since it makes purchasing them more expensive for buyers paying with other currencies.

LME copper ended barely changed, down 0.04 per cent at $US4,578 a tonne, following 0.7 per cent losses in the previous session when it touched its weakest since February 15 at $US4,540.

Copper fell one per cent this week, the third straight week of losses, and has shed nine per cent so far in May.

"It's possible we'll see fresh 2016 lows. Copper got a bit ahead of itself in April and I don't think the longs have been washed out just yet, we've also seen profit-taking across other markets," said analyst Daniel Hynes of ANZ in Sydney.

Signs that buyers in China were becoming more active emerged as local copper prices in the physical market traded higher than front-month futures on the Shanghai Futures Exchange for most of this week.

A global nickel market deficit widened to 8,200 tonnes in March from a month earlier, led by a surge in demand from China, International Nickel Study Group figures showed.

"The market action of recent weeks vindicates the producer selling that emerged above $US9,000 but is a big disappointment for bulls whose patience looks set to be tested once again for a few months," broker Triland said.

LME nickel closed down 0.6 per cent at $US8,500 a tonne, zinc rose 0.3 per cent to $US1,866 and lead shed 0.7 per cent to $US1,675.

Tin, untraded in closing rings, was bid down 0.4 per cent at $US16,450.

Originally published as Aluminium lifts, but copper is flat

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