Copper rises as inventory build-up falters

Copper rose on Friday after six straight sessions of decline as a surge in inventories halted and workers began an indefinite strike at the Cerro Verde mine in Peru, raising supply fears. Industrial metals rose broadly as a week-long rout of global commodities caused by a strong dollar, concerns of supply gluts and tepid demand from China began to falter.
Three-month copper on the London Metal Exchange closed up 0.7 percent at $5,732 a tonne. Prices had fallen to $5,652, their lowest since January 10, in the previous session. "Another supply disruption has returned attention to the possibility of a drawn-out disruption having a negative impact on supplies," Ole Hansen at Saxo Bank said.
"That's offsetting what has otherwise been a week where the market has been focusing on the dollar, which has been going higher, and these strong rises in LME inventories," he said.
Workers at Cerro Verde mine in Peru downed tools on Friday, halting output of 40,000 tonnes per month in a dispute over labour conditions. The action adds to disruptions at the world's two largest copper mines in Chile and Indonesia. Copper stocks in LME-registered warehouses fell by 1,800 tonnes. But stockpiles are still 125,500 tonnes, or 63 percent, higher than at the start of March and at their highest since December.
Rising inventories have helped push the copper price down 4 percent so far this month, spurring investors to abandon bets on higher prices. A record long position has largely unwound, reducing the risk of big price falls for copper, said Guy Wolf at Marex Spectron.
"After a wave of negative headlines and data-points bringing us back into the mid-$5k's, that is a better place to be expressing long positions in our view," he said. Aluminium closed 0.6 percent higher at $1,880 a tonne. Zinc ended up 0.9 percent at $2,705, lead was 0.5 percent higher at $2,262.5 and tin finished up 0.5 percent at $19,350 a tonne. Nickel however ended 2.6 percent lower at $9,890 a tonne, bringing its weekly losses to almost 10 percent, the worst since September 2011.
The metal used in stainless steel has been hit by concerns that mine supply from the Philippines may pick up just as Indonesia resumes exports. "It all looks quite nasty for nickel suddenly," said David Wilson at Citi. "There will be additional units flowing into China that the market hadn't expected."