Copper fell on Friday to its lowest level since late May after another month of disappointing import statistics from China weighed on sentiment, and left the market to pin its hopes on a June revival. The negative close dragged prices down for a second straight week. From an extended dollar rally versus the euro to easing supply-side threats in Chile to a deteriorating technical picture, further weakness was likely in store for prices in the week ahead, analysts said.
"I can see it getting a little lower early on next week," said Catherine Virga, senior base metals analyst with CPM Group in New York. "With the supply disruption winding down, the fact that we have had this bearish import data, and this big move in the dollar ... I don't think it's going to start off the week strong."
Codelco said on Thursday its El Teniente mine, the world's No 5 copper mine, was producing at 51 percent capacity and recovery was gradual, after thousands of contract workers opted to abandon a sometimes violent 17-day walkout over wages at the 404,000 tonnes-a-year site.
But hopes for an imminent end to the output disruption hit a snag on Friday afternoon when union sources said staff workers would not fully return to work after fresh contractor protest violence. London Metal Exchange (LME) three-month copper shed $117, or 1.3 percent, to close at $8,938 a tonne, down from $9,055 on Thursday.
The metal plumbed its lowest since May 25 at $8,901.75 a tonne, with technical pressures picking up after the price broke down below the 200-day moving average, at around $8,933. In New York, the COMEX July contract fell 5.15 cents to $4.0560 per lb, after breaking through its own 200-day moving average at around $4.08.
"The market has been feeling heavy generally, and Chinese import figures didn't help," said Leon Westgate, analyst at Standard Bank. China's imports of unwrought copper and semi-finished copper products dropped 3 percent in May, after falling 13.7 percent in April because of high inventories. Analysts and traders had expected a slight rise. Still, analysts say demand in China, the biggest consumer of copper, remains strong and that consumers will start buying again this month as inventories are run down.
"Investors may have been relieved that the rate of decline seems to be moderating and may now be looking to June for a potential uptick following what is widely perceived to be a period of destocking," said MF Global in a research note. Copper stocks in bonded warehouses in Shanghai are estimated to have fallen by 50 percent or more from above 600,000 tonnes earlier this year as merchants sold the material into China's backwardated market to take advantage of strong prompt prices.
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