Copper declines

Copper fell on Friday, after hitting a five-month high on Thursday, as the euro tumbled on worries about Greece's bailout plan, but still solid copper import numbers from China limited further losses. Political parties in Athens had struck a long-awaited deal on harsh austerity steps necessary for a second rescue, and a debt swap deal with Greece's private bondholders was almost finalised.
But final approval for the deal remained elusive. The leader of a far-right party in the coalition government of Prime Minister Lucas Papademos said he could not vote in favour of the 130-billion euro ($172.95 billion) bailout agreement the country needs to avoid going bankrupt.
That extended the euro's losses versus the dollar, putting pressure on base metals prices. Gains in the dollar can make dollar-denominated commodities more expensive for consumers using other currencies. Three-month copper on the London Metal Exchange ended down 3.14 percent at $8,485 a tonne from $8,760. It hit $8,765 on Thursday, its highest since September 16.
"There are slight renewed worries about Greece, but I don't think this pullback is anything to worry about," Standard Chartered analyst Daniel Smith said, predicting copper could hit $9,000 per tonne in the next couple of weeks. Copper rallied on Thursday, as the dollar fell and the US government reported a steep decline in the number of Americans filing new unemployment benefits last week.
Although copper imports by top consumer China fell 18.7 percent in January from December, many factories were shut during the week-long Lunar New Year holiday. The drop was in line with market expectations, and volumes at more than 400,000 tonnes signalled still healthy demand.
"Base metals are down, but not down for the count," RBC said in a research note. "With all this uncertainty, the metals are still holding up well. With the exception of aluminium and lead, all the metals are holding above their respective 200 day moving averages." The metals market is also moving into a seasonally strong period, as the end of the northern hemisphere winter approaches and construction restarts in the spring. Copper is used widely in construction.
Inventories of metals held in LME-monitored warehouses have also been mostly falling. Copper stocks held in the warehouses monitored by the LME, closely watched by investors to determine the health of copper demand and by proxy the global economy, have dropped by 10 percent since 2011 to 2.5 year lows.
Data on Friday showed copper stocks fell a further 850 tonnes. "Overall sentiment has improved and further near-term price gains seem likely," Credit Suisse said in a research note. "However, for these gains to be sustainable, we would also need to see Chinese buyers return to the market."
Tin ended down 1.4 percent at $20,705 from $25,400. Indonesia said on Friday it will ban exports of some unprocessed metals, including copper, nickel, tin, bauxite and zinc, from 2014. The country is a major producer of raw materials. Aluminium ended down 1.92 percent at $2,243 from $2,287, nickel down 3.88 percent at $20,705 from $21,540, zinc down 3.84 percent at $2,077 from $2,160 and lead down 3.92 percent at $2,135 from $2,222.