By Eric Onstad
LONDON, May 10 (Reuters) - Copper steadied on Friday after losses in the
previous session as inventories kept falling and further improvements emerged in
economic data, but a firmer dollar weighed on the market.
Three-month copper on the London Metal Exchange - on course to
stretch its weekly winning streak into a third week - edged up 0.3 percent to
$7,376 a tonne in official midday trading after rising to a session high of
The contract is up 1.1 percent for the week, after hitting $7,480 on
Wednesday, its loftiest in about a month. LME copper has recovered more than 9
percent from 18-month lows in April amid indications that the global economy is
not in as bad a shape as previously thought.
The most-traded September copper contract on the Shanghai Futures Exchange closed up 0.9 percent at 53,420 yuan ($8,700) a tonne.
Bulls have taken heart after LME copper tested lows around $6,800 a tonne
and rebounded strongly.
'Technically it looks we've got the lows in place because there's a double
bottom there. And the data is all suggestive that Chinese demand is increasing,
although perhaps not as aggressively as we we'd hoped.'
Analysts say that steady demand from top metals consumer China is showing up
in eroding inventories on the London and Shanghai exchanges.
In Shanghai, data on Friday showed copper inventories fell by 8.8 percent
over the past week to 195,043 tonnes, the lowest level since October.
Copper stocks in LME warehouses declined by another 1,500
tonnes on Friday to 604,250 tonnes, their smallest in about a month.
Also, an expected global surplus in refined copper may be reversed as a
shortage of copper scrap is expected to cut China's production of refined metal
by at least 100,000 tonnes this year, industry sources said.
Investors have also been buoyed by upbeat economic data, including U.S.
jobless data on Thursday and German trade numbers on Friday, hoping they would
translate into firmer metals demand.
'Going forward, for prices to build on the recent bounce we would clearly
need to see a bit more improvement in real economic activity,' said Credit
Suisse analyst Stefan Graber.
Also key to copper's future direction was the stance of speculators, who had
heavily bet on falling prices and have helped fuel the recent rebound by buying
back some of their short positions. 'Price action has already indicated that
weak hands are being forced out of shorts,' analyst George Adcock at broker
Marex Spectron in London said in a note.
'The key driver of the next leg will be determined by whether medium- to
longer-term CTAs (commodity trading advisors) continue, or start, to liquidate
A stronger dollar, however, weighed on the market, making metals
priced in the U.S. currency more expensive to buyers in other countries.
Tin added 0.4 percent to $20,800 a tonne in official trading after
data on Thursday showed shipments from the world's biggest exporter fell 15.5
percent in April from the previous month.
'Yet again, this underlines how price-elastic the country's tin exports and
its output are. In the wake of the slump in prices last month... a number of
smelters scaled down production,' Commerzbank said in a note.
Aluminium shed 0.8 percent to $1,875 a tonne in official rings and
lead also lost 0.8 percent to $2,001.
Nickel rose 0.55 percent to $15,370 a tonne in official trading
while zinc fell 0.2 percent to $1,868.
Metal Prices at 1211 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
COMEX Cu 334.80 1.05 +0.31 365.25 -8.34
LME Alum 1871.50 -19.50 -1.03 2073.00 -9.72
LME Cu 7381.25 -37.75 -0.51 7931.00 -6.93
LME Lead 2003.25 -13.75 -0.68 2330.00 -14.02
LME Nickel 15361.00 76.00 +0.50 17060.00 -9.96
LME Tin 20761.00 36.00 +0.17 23400.00 -11.28
LME Zinc 1864.50 -7.50 -0.40 2080.00 -10.36
SHFE Alu 14635.00 20.00 +0.14 15435.00 -5.18
SHFE Cu* 53600.00 400.00 +0.75 57690.00 -7.09
SHFE Zin 14590.00 10.00 +0.07 15625.00 -6.62
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Manolo Serapio Jr, editing by William Hardy)
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