NEW YORK/LONDON: Copper finished higher on Friday, with support from a weak dollar, steadier equities, Chilean supply threats and Asian demand signals enabling prices to overcome overnight selling pressures.
It was a day of indecisiveness in the base metals complex. Zinc, lead, and tin all tracked copper higher, while nickel plumbed one-week lows and aluminium sank to a new yearly trough.
Still, copper prices posted their third consecutive weekly loss as investors have grown increasingly uneasy about global recovery prospects after a string of disappointing data in the United States
and Europe's ongoing credit crunch directed investment flows into safer havens like gold, which rallied to a new all-time high on Friday.
"Short-term we are negative on base metals and we think that cautiousness is warranted at this point in time," said Arne Lohman Rasmussen, analyst at Danske Bank.
London Metal Exchange (LME) benchmark copper closed up $51 at $8,825 a tonne, recovering from an earlier slide to $8,700, its lowest level since Aug. 11.
In New York, the September COMEX contract settled up 1.75 cents at $3.9835 per lb, near the upper end of its $3.9255 to $4.0145 session range.
Copper prices have fallen more than 10 percent so far this month, as fear-based liquidation pressures in world financial markets and the subsequent safe-haven flows into the dollar weighed on values.
Aside from the weaker macro influences, some positive demand signals for industrial metals have begun to catch some participants' eyes.
"There are some small signs of a little bit of strength," said Justin Lennon, analyst with Mitsui Bussan Commodities in New York.
"There are some small signs of a little bit of strength. The Baltic Dry Index is up over its 50- and 100-day moving averages ... it may be reflective of some interest out of China," he added.
FUNDAMENTALS INTACT
Supply threats in Latin America are also on investors' radar screens. Workers at Chile's Collahuasi, the world's No. 3 copper mine, have threatened a one-day stoppage on Sept. 2 if the company does not hire back workers fired after a previous disruption.
"Setting aside the weak macro environment, copper's fundamentals remain well supported. Risks of short-term disputes and potential supply outages remain," ANZ said in a note.
In a further boost to copper, inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.3 percent from last Friday, raising expectations that destocking in China was under way. Aluminium stocks fell by 5.8 percent.
"China has already taken advantage of the fall in prices since the start of the month and bought copper especially in anticipation of a global supply deficit. This should be reflected in higher imports in the coming months," Commerzbank said in a note.
"Copper imports have already picked up again in the last two months, not least because of attractive arbitrage opportunities between the exchanges in London and Shanghai."
More than 100,000 tonnes of aluminium flowed into LME-registered warehouses in Vlissingen, latest data showed, in another big increase that has inflated stocks in the Dutch port to over 700,000 tonnes.
Copyright Reuters, 2011
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