Copper started the new trading month on a firm footing on Friday, ending up for a fourth straight session as economic confidence improved on the back of stronger manufacturing data from the United States. The positive close helped drive copper up more than 4 percent on the week, its largest gain since the second week of April, when the price rallied over 5 percent.
Confidence in the market grew after the safe passage of two austerity measures in Greece eased some concerns about a debt default, helping technicians mount a convincing charge above the 200-day moving average. "There is a bit of bullish sentiment over the last three days that has this market kind of breaking out," said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.
London Metal Exchange (LME) three-month copper edged up $5 to close at $9,435 a tonne. In New York, the September COMEX contract settled up 2 cents at $4.3025 a lb. The economically sensitive base metal maintained its weekly bullish momentum after data showed growth in US manufacturing picked up for the first time in four months in June.
The surprisingly upbeat US data ran counter to slower manufacturing activity in Europe, India and China, where weaker consumer demand and months of policy-tightening measures sapped production rates. The moderation in China's factory sector lowered expectations for another round of monetary tightening. "The consensus is that the tightening measures are having their desired impact and this is a part of their grand master scheme to control their economy," Great Pacific's McGillivray said.
"That's the consensus and consensus is what's driving the market right now," he said. Friday's data showed the pace of manufacturing growth in the United States had increased in June, but that factory activity in top metals consumer China had slowed, raising concerns about demand.
China's official Purchasing Managers' Index (PMI) for June fell to 50.9 from 52 in May, the China Federation of Logistics and Purchasing said on Friday. This was less than the 51.3 expected by the market. HSBC's China PMI for June dipped from 51.6 to 50.1, the lowest in 11 months. The pace of growth in the US manufacturing sector, however, picked up for the first time in four months in June, a sign of optimism for the sputtering economy, according to an industry report. Auto sales results by top-selling automakers for June so far were 14.6 percent higher year-on-year, above expectations of an 8 percent increase.
Aluminium, used widely in car-making, could benefit in particular if the final figures are positive. Prices have also taken support from data showing that inventories of the metal in LME warehouses had fallen nearly 16,000 tonnes. "We've got an all-time record drawdown in June of combined LME and Shanghai aluminium inventories," said Nick Moore, global head of commodity strategy at RBS Global Banking and Markets.
"That's very supportive for the aluminium story, particularly as we look ahead with the auto manufacturers deciding to work through the summer to make up for lost production." Tin, untraded in rings, was bid at $25,650 from $26,050 at Thursday's close, while zinc finished at $2,360 from $2,365. Lead was at $2,674 from $2,684 and aluminium was at $2,503 from $2,532. Nickel was $23,000 from $23,425.