Copper turns down

Copper closed lower on the London Metal Exchange (LME) on Friday on profit-taking in thin volumes, dealers said. "A bit of technical selling came in as the charts for copper looked a bit grim and trade was thin at best," a trader said.
"If copper holds $7,000 next week, you might see buying," he added.
Three months copper closed the kerb at $7,220 a tonne against $7,310 in the previous session. On Thursday copper fell more than six percent in a heavy sell-off across financial markets. European stocks also posted gains after miners and oil producers slid to its lowest close since November 2005 on Thursday. Sentiment on the financial markets has been led by macro-related concerns over inflation, tightening monetary policy and a stronger dollar, while supportive fundamentals in base metals had taken a back seat.
A Fortis monthly report said the decision by investors to take profits and sell base metals in May had little or nothing to do with any changed fundamental prospects facing copper, nickel and zinc. Instead, copper's fundamentals showed growing demand and a slow-starting new supply stream. "Speculative investors took fright in May but the fundamentals remain strong and copper could easily reach $10,000 a tonne before the end of 2006," the report said.
On Thursday, leading copper producer Grupo Mexico said it would close its strike-hit La Caridad copper mine in Sonora state and also threatened to shut down its huge Cananea copper mine.
The chief executive at Chile's Codelco said on Thursday the company saw global copper demand remaining strong through 2007, but current prices were not sustainable in the medium term. Merrill Lynch believed prices could go higher, raising price forecasts for copper, zinc, aluminium and nickel. China was an important demand driver for zinc, Fortis said.
"Underlying fundamentals imply a physical squeeze for the next two years," the report added. LME inventories fell by 1,175 tonnes to a fresh five-year low of 229,250 and zinc closed at $3,320, up $20. However, nickel fell to $20,000 from $20,250/20,300. Fortis was less bullish on aluminium as LME stocks rose to 775,325 tonnes, up by 9,425 on Friday. Aluminium ended at $2,510, up $8. Lead closed at $1,010 versus $1,013 and tin gained $75 at $7,975.