Copper falls over three percent

Copper fell more than 3 percent to its lowest in more than 2 weeks while tin and nickel also fell, by almost five percent on Friday, on unrelieved worries about economic growth and with a stronger dollar weighing on prices. The euro sank to its lowest in six and a half months against the dollar after sources said ECB Executive Board Member Juergen Stark will step down from his post because of a conflict over the central bank's controversial bond-buying program.
A stronger US unit makes dollar-priced commodities such as base metals more expensive for holders of other currencies. Three-month copper on the London Metal Exchange closed at $8,821 a tonne, from $9,115 at the close on Thursday. US Federal Reserve Chairman Ben Bernanke gave no steer on new stimulus measures, and President Barack Obama will battle to win over Republicans on his proposed $447 billion growth and job creation package.
"The broader market sentiment is going to weigh on metals until the next Fed meeting, when the US will announce something about its monetary policy," said Andrey Kryuchenkov, analyst at VTB Capital. The next Federal Reserve interest rate policy meeting is scheduled for September 20-21.
Data on Friday showed withdrawals from LME-monitored warehouses across most major contracts, apart from tin and zinc, helped by the arbitrage - lower three-month LME metal prices than the most active Shanghai contract prices. The fall in copper stocks was small, but there were some healthy orders from South Korea. Lead stocks fell by 925 tonnes, with lots of deliveries out in what appears to be a pick-up in demand. "I would look at the situation in China as one where, whether because it's concerns about economic growth or more likely because of monetary tightening, inventories have to come down quite substantially, and they are currently at low levels," Brown said.
"I think Chinese consumers are aware they will have to rebuild those inventories in the not too distant future." Tight supplies will also continue to underpin copper prices. Workers at Peru's No 3 copper producer Cerro Verde were back on the job on Friday after a two-day pay strike but could launch an indefinite walkout next week, a union representative said.
A strike scheduled from September 15 to October 15 at Freeport McMoRan Copper & Gold's Grasberg mine in Indonesia, the world's third-largest, was also threatening to squeeze supply. In nickel, LME-monitored warehouses have reported big outflows in recent days as physical consumers have reportedly started to step up purchases of refined nickel, used to produce stainless steel.
"At current price levels, major steel producers are reportedly using more refined nickel again as the cost advantage of competing nickel pig iron has softened," Credit Suisse said in a note. "This should provide nickel with some fresh impetus on the demand side. While the sector will continue to depend on the broader macro economic environment, fundamental dynamics point to further price support."
The stronger dollar however pulled nickel prices down on Friday, stopping a three-day rally. LME nickel fell to a session low of $21,050 a tonne, before ending at $21,150, from $22,050 at the close on Thursday. Tin, fell to hit its lowest since August 25 at $23,300, before closing at $23,505 from $24,475. Zinc closed at $2,186 from $2,251, and aluminium at $2,367 from $2,420. Lead finished at $2,450 from $2,490.