LONDON: Copper fell on Friday as expectations of higher US interest rates strengthened the dollar, but prices remained on course for their first weekly gain in four weeks thanks to signs of recovering Chinese demand.

Benchmark copper on the London Metal Exchange (LME) was down 0.3% at $8,995 a tonne at 1709 GMT but up 1.5% over the week.

Prices of the metal used in electrical wiring hit a seven-month high of $9,550.50 in January as the dollar weakened and speculators bet that the Chinese economy would revive.

But the rally lost momentum as the dollar regained ground, making metals costlier for buyers with other currencies, and inventories piled up in Chinese warehouses.

Credit being pumped into China’s economy should boost growth and copper consumption, said Dan Smith, head of research at Amalgamated Metals Trading.

He said that copper supply and demand should accelerate, predicting a market deficit of about 200,000 tonnes this year and prices above $10,000 a tonne by the end of June.

“I think we’re going to go lower in the next few days,” he said. “(But) I’m bullish from a 3-6 month perspective.” Stock markets dropped on Friday and the dollar leapt to six-week highs as jobs data revived expectations of further increases to US interest rates, which also sent oil prices down 3%.

In China, the pace of copper inventory build-up slowed, with stocks in Shanghai Futures Exchange warehouses rising 3% to 249,598 tonnes in the week to Friday.

Yangshan copper import premiums increased this week for the first time since November, suggesting improved Chinese demand. They were last at $24.50 a tonne. The market also faces lost copper production.

First Quantum Minerals warned employees it may have to shutter operations in Panama and Freeport-McMoRan’s Grasberg mine in Indonesia is not expected back online until the end of March after heavy rains and landslides.

LME aluminium was down 0.3% at $2,388 a tonne, zinc rose 2.1% to $3,065, nickel fell 2.6% to $25,800, lead gained 2.1% to $2,072 and tin was down 4.1% at $25,905. All except zinc were heading for weekly falls.