Copper steadied on Friday as falling stockpiles countered the impact of a strong dollar and offset concerns over an expected seasonal demand slowdown in China that pushed prices to a six-week low earlier in the session. Daily London Metal Exchange data showed copper stocks fell to 315,125 tonnes, their lowest point since early March and further denting long held expectations that the copper market will record a large surplus this year.
The strongest quarter for demand in China, the world's top copper consumer, is passing its peak, with factories eyeing a summer production slowdown. But some analysts believe falling copper stocks show that demand might not actually be that thin. "Our overall view is you're not going to see a significant softening in copper market fundamentals over the next few months. LME stock will draw at least in June and July," Nicholas Snowdon, metals analyst at Standard Chartered, said.
LME copper fell to $5,885 a tonne, its weakest since April 23, before paring losses to end up 0.4 percent at $5,937 a tonne, clocking a third consecutive weekly fall. The dollar rose versus a currency basket after data showed US job growth accelerated in May and wages picked up, evidence of momentum in the economy that could revive expectations of an interest rate increase in September. A strong dollar makes dollar-priced metals costlier for non-US investors.
Aluminium closed up 0.4 percent at $1,750.50 a tonne, having earlier touched its lowest in over a year at $1,726 a tonne. "We're still drowning in aluminium from China, that hasn't stopped. The whole picture in metals doesn't look great and the US jobs data doesn't change anything in the short term," INTL FCStone analyst Ed Meir said. Nickel closed up 1.7 percent to $13,175 a tonne on expectations that China will eventually turn to refined nickel as its ore stockpiles drop. "We still expect a large deficit in 2016, but it will take longer to run down excess inventories," BNP Paribas said in a note. The bank issued a trading recommendation to retain existing "long" or buy positions in nickel on a risk-reward basis, but said there was no hurry to initiate fresh longs.
Lead ended down 1.3 percent at $1,902 a tonne on the view that the price rally that took place between March and late April this year was overdone given the market is still well supplied. Zinc ended down 0.6 percent at $2,130 a tonne while tin closed down 1 percent at $15,300 a tonne, having hit its lowest level since April 21 at $15,185 a tonne earlier.
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