US copper futures slid in late trade and closed just above session lows as participants squared positions ahead of the weekend, traders said. The early boost provided by healthier-than-forecast US jobs data was viewed as an opportune time to sell, they added.
Some players were thought to have gone long above $2.63 a lb in May futures, just above the week's low, waiting for a test of higher levels after the US payrolls report, but then got out before the weekend.
"I think the (copper) market has performed pretty well this week overall considering the sell-off the equity markets had in the last couple of weeks. But metals players were sidelined yesterday and today, and what you probably saw was end-of-week book squaring," said a base metals dealer.
Copper for May delivery finished 4.95 cents lower at $2.7840 a lb on the New York Mercantile Exchange's COMEX division. After the payrolls data, the contract firmed to a high at $2.83 a lb, then turned and fell to a low at $2.7765. Spot March ended down 4.85 cents at $2.7770. The rest of the board finished from 1.95 to 4.95 cents lower.
Overnight selling showed traders set up for a much weaker US labour report than the 97,000 jobs added to February's payrolls. That was just beneath the 100,000 expected, but January and December jobs growth was revised up by a total of 55,000 and the unemployment rate fell to 4.5 percent in February from 4.6 percent a month earlier.
"It's certainly better than the market's worst fears and stronger than the whisper numbers beforehand. It's certainly helpful for risk appetite and that's what the markets are taking their cue from," said Alan Ruskin, chief international strategist at RBS Greenwich in Connecticut.
The US currency jumped against the euro and the yen, mirroring a surge in US equity markets, soon after the US Labour Department statistics came out. Traders sometimes sell copper when the dollar rises because it makes the dollar-denominated red metal more expensive in overseas markets. But gains in equity markets indicated a healthier economic outlook, and suggested strong demand for industrial metals will continue.
Even so, traders said the recent volatility in metal markets has left many participants shy about leaving long positions on through the weekend. "Volatility has been greater than what people want to deal with over a weekend. So, I think end-of-week booksquaring, whether or not it was profit taking," said one metal trader.
Also, within the report construction and manufacturing jobs, big copper using sectors, showed some of the largest declines in payrolls. Exchange floor volume was a paltry 2,100 lots on Friday, down from 13,250 lots traded on Thursday. Traders said any decision to sell probably had an exaggerated effect.
Longer-term, some traders said they thought copper's prospects remain strong and expected a retest of recent highs. "But we need to see more confidence in the business in the US Right now, there's not much going on, on the physical side here. If you think China's consumption is going to remain strong and they will restock their strategic stockpiles, then you'd have to be bullish on copper. If you don't believe that, it's hard to be bullish at $2.80," said one trader. LME three-months copper ended the Friday kerb at $6,130 a tonne, down from Thursday's kerb close at $6,275.
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