NEW YORK/LONDON: Copper ended up for a fourth straight day on Friday, as investors banking on a second-half demand revival in China and longer-term supply tightness stepped up purchases ahead of a long holiday weekend.
Even after a highly-anticipated speech from US Federal Reserve chairman Ben Bernanke displeased some investors by failing to offer any fresh stimulus measures, industrial metal prices failed to reflect the disappointment.
Gains piled up across the complex, with short-covering rallies boosting both lead and zinc by more than 3 percent and nickel futures by 2.7 percent.
Copper snapped a three-week losing streak as investors shifted their focus away from the Fed and its bleak assessment of the US economy and instead began to concentrate on the metal's increasingly bullish fundamentals.
"Compared with the stock market, copper is pretty resilient. This has been the case for a few days now," said Stephen Briggs, an analyst at BNP Paribas.
"People are still buying into the story that there are supply side issues that won't go away regardless of how strong or otherwise the economy is going to be."
London Metal Exchange (LME) three-month copper briefly dipped below $9,000 per tonne after Bernanke stopped short of signaling further action to boost growth, before staging a late recovery to end up $45 at $9,075.
The LME will be closed on Monday, Aug. 29, for a summer bank holiday. Trading will resume on Tuesday.
In New York, the active December COMEX contract rose 1.95 cents to settle at $4.1175 per lb.
Trading volumes picked up alongside buyer momentum Friday, with about 60,000 lots traded in New York -- up more than 20 percent from the 30-day norm, according to preliminary data from Thomson Reuters.
US data showing the economy grew at a paltry 1 percent annual rate in the second quarter added to the pessimistic tone, but failed to dent copper's longer-term considerations.
"It's definitely bearish for copper, but not to the tilt that it will knock it off its pedestal to a significant degree because it still has China," said Zachary Oxman, managing director with TrendMax in Encinitas, California.
In its Q2 earnings statement, Glencore said "We now do see more buying existing in China, which should hopefully lead to the stronger second half of 2011".
A threatened strike in coming days at Freeport McMoran's Grasberg copper mine in Indonesia, the world's third biggest, added another layer of support for prices and reinforced concerns over supply tightness.
Helping copper prices further, the dollar fell against a basket of currencies.
INVENTORIES FALL
Highlighting firm demand and dwindling supplies, deliverable inventories of the metal in warehouses monitored by the Shanghai Futures Exchange fell 8.7 percent, or almost 10,000 tonnes to 102,258 from last Friday.
"On the physical side, demand is gradually recovering," said VTB Capital analyst Andrey Kryuchenkov.
"Stocks in Asia are moving down, spot premiums are holding up and the cash-to-three-month is moving towards a backwardation. These are all signs that demand is there."
The copper cash-to-three-month contango -- a discount for cash over three-month material -- narrowed to $14.50 from $25.75 on Aug. 3.
Three-month aluminium closed up $17 at $2,378 per tonne.
Japanese shipments of aluminium products fell 4.8 percent in July from a year ago to 170,916 tonnes, down year-on-year for the second month in a row as the impact from the March earthquake was still felt.
The country's output of rolled copper product also fell 4.1 percent in July from a year earlier, its second consecutive year-on-year fall, due to sluggish demand from auto and chip makers, an industry association said.
Copyright Reuters, 2011
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