Copper futures clawed back above $3,000 a tonne on Friday as investors in China bought the metal a day after it plunged more than 4 percent on a rash of profit-taking by investment funds. Concerns over an imminent supply squeeze in Shanghai allowed three-month copper on the London Metal Exchange to recover around a tenth of its losses, after it closed on Thursday at its lowest level since mid-November.
"There's been some opportunistic buying from consumers, as well as short covering," said Peter Richardson, head of global commodity research at Deutsche Bank in Sydney. Three-month copper was trading at $3,000/$3,007 a tonne.
It started the day at below $2,980, having lost $125 on Thursday to close at $2,990. Copper, used in everything from air conditioners to computer chips, has gained around 40 percent in value in the last year, peaking on October 11 at a near 16-year best of $3,175 a tonne.
"The Chinese still want to buy, as physical metal supply is still tight," a futures trader in Shanghai said.
The market is concerned that China's State Reserves Bureau could provoke a supply squeeze if it takes delivery on December 15 of more than 30,000 tonnes of copper against its December contract on the Shanghai Futures Exchange.
But the traders and analysts noted imports of copper, particularly Kazakh metal, were increasing this month, easing ease fears of a shortage. Reports of the incoming Kazakh copper helped to triggered on Thursday's losses, they said. "We're talking about the alleviation, rather than the entire removal, of pressure to deliver on December 15," said Deutsche Bank's Richardson, explaining on Friday's slight rebound.
Shanghai exchange copper stocks, at 23,258 tonnes as of November 26, were around one-fifth of what they were a year ago.
LME copper stocks totalled 58,700 tonnes on Thursday, there lowest since mid-1990. Though long-term prospects for the US dollar remained bearish, traders said a slight rally from its record lows against the euro also contributed to Thursday's slump on the LME.
A weak dollar encourages buying of copper and other metals as an alternative investment tool.
The euro scored around $1.3265 against the dollar on Friday, while the US currency bought 103.40 yen, well off a five-year low of 101.83 yen on Thursday. All eyes are now on the release of US job data, due.
Economists' median forecast is for 180,000 new jobs compared with a rise of 337,000 in October. Reacting to the weaker LME, Shanghai copper fell its 3 percent daily limit when the market opened on Friday.
Although losses on some contracts were trimmed later in the most-active February copper lost its maximum 870-yuan to 27,980 yuan a tonne. US copper futures ended on Thursday with severe losses. Most-active March copper on the New York Mercantile Exchange's Comex division fell 6.45 cents to close at $1.3750 a pound.
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