Copper hits three-week high

Copper hit three-week highs on Friday, as a weaker dollar boosted prices, but pared gains as poor US data underlined a patchy global economic outlook that suggested its advance may falter. Three-month copper on the London Metal Exchange traded at $9,199 a tonne, from Thursday's close of $9,020. The metal earlier hit $9,238, its highest since May 4, as the euro climbed to a session high against the dollar. However copper prices were on track for a third monthly loss.
"Initially the rebound after the sell-off was a short covering rally, particularly for copper," analyst Michael Widmer of Merrill Lynch-Bank of America said. Base metals were getting help from a falling US currency, which makes dollar based commodities cheaper for holders of other currencies.
The euro took off against the dollar on Friday, helped by comments out of Europe suggesting Greece should be able to handle its heavy debt load and possibly underpinning the single currency next week. Its rally against the dollar was speeded by patchy data out of the United States. The United States and Britain will be on holiday on Monday.
"Given the pending long weekend it is likely the focus today will be more on book squaring, and window dressing ahead of month-end Tuesday," FastMarkets said in a note. A study on warehousing commissioned by the London Metal Exchange has advised that warehouses with large stockpiles be required to deliver out much more metal each day following complaints by consumers of long delays in receiving material.
"This should not affect premiums for material too much," said one LME trader. "Queues will drop to 200 days which is still a long time although the recommendations seem reasonable and are as much as the LME could do without causing a major impact on the structure of the market, or putting too much of a financial burden on the warehouse companies."
Inventories of copper in LME warehouses rose 1,250 tonnes to 469,475 tonnes, data showed. Copper stocks are more than 30 percent higher than in early December. In top consumer China, copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 8.7 percent or around 7,800 tonnes from last Friday, the exchange said.
Despite expectations of a market deficit this year, Widmer of ML-BoA said even with the accelerating pace of withdrawals from SHFE inventories since mid-March, the global copper market stands in a 185,000 tonne surplus this year so far. Bloomsbury Minerals Economics however, said current pessimism regarding copper was "overdone". LME aluminium stocks fell 3,275 tonnes to 4,702,825 tonnes, off a record high of 4.71 million tonnes, while cancelled warrants - the metal tagged for removal from warehouses - surged by more than 70,000 tonnes.
Aluminium ended at two-week highs of $2,625 from $2,562.5. Tin closed at $27,500 from $26,900 a tonne while zinc finished at $2,275 from $2,260, hitting a high since early May at $2,289. Battery material lead ended at $2,505 from $2,491 a tonne and nickel closed bid at $23,100/23,125 from $22,825 a tonne. BHP Billiton said on Friday that a shortage of hydrogen has halted output temporarily at its Kwinana nickel refinery in Western Australia.