Shanghai Futures Exchange (ShFE) copper futures fell 1.7 percent to 46,400 yuan ($6,710) a tonne on Thursday after solid US jobs data increased the likelihood of an interest rate hike this month and on signs that a disruption at the world's biggest copper mine may soon ease. ShFE nickel tumbled 5.5 percent on the possibility that the Philippines' hard-line environmental minister may not be confirmed by Congress, opening the door to a new minister who may be more permissive of the mining sector.
"A Fed rate hike after the strong US job report may strengthen the dollar, hitting copper, which is denominated in dollars," Argonaut Securities said in a report. "(But) underlying fundamentals continue to reflect increasing demand and supply shortages. Therefore, we think any pullback in copper prices will be short-term and providing a buy-the-dip opportunity."
Supporting copper prices, spot processing fees in Asia for copper concentrate have slid to their cheapest in four years as shutdowns at the world's top two mines in Chile and Indonesia grind on longer than anticipated. However, an end to the disruption at the world's biggest copper mine may be on the horizon, after BHP Billiton, said it may try to restart production at Escondida in Chile using temporary workers once the strike surpasses 30 days. LME nickel eased 0.8 percent, while on the demand side, a trade deficit in China for February has reinforced the growing view that economic activity in China picked up in the first two months of the year, adding to a global manufacturing revival.
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