Copper moves higher

Copper rose on Friday as funds stepped in to buy after the metal fell to a one-month low on concerns over potential Chinese monetary tightening and proposed sweeping restrictions on US banks. Other metal prices remained depressed, with both zinc and nickel falling around 5 percent.
Copper for three-month delivery on the London Metal Exchange ended at $7,390 a tonne from $7,265 at the close on Thursday. The metal used in power and construction earlier touched $7,194, its lowest since December 24. "It's a technical reaction, some funds decided to take a position. It shows the impact of financial investors on the market and that might also be addressed by further regulations going forward," said Commerzbank analyst Eugen Weinberg.
Investors are concerned China might tighten credit to prevent its economy from overheating, after data on Thursday showed Chinese growth surged in the fourth quarter of 2009. China's buying helped copper rocket 140 percent in 2009 and monetary tightening could cool demand from the world's top consumer of base metals.
"Sentiment is a bit battered and bruised," said Charles Kernot, an analyst at Evolution Securities. "People are worried that China's going to take some rice out of the bowl, in terms of the amount of money flowing around the Chinese economy." Cancelled warrants of copper in LME warehouses - metal tagged for delivery - rose to 12,075 tonnes from 7,150 tonnes the day before, with the largest bulk of cancelled tonnage at Busan in South Korea.
"It indicates still decent demand in Asia," said David Thurtell, an analyst at Citi. Indicating that demand outside China remains weak, LME copper stocks continue to forge higher. Inventories fell 450 tonnes, but at 534,200 tonnes levels are around the highest since late February 2009. Aluminium ended at $2,232 a tonne from $2,238 after earlier touching $2,195, its lowest in 6 weeks.
LME inventories of the metal used in transport and packaging fell 5,675 tonnes, but stand above 4.6 million tonnes after hitting a record high this week. A large chunk of those stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.
Steel making ingredient nickel ended at $18,310 from $18,900, having earlier hit a more than one-week low of $18,075, while zinc ended at $2,350 a tonne from $2,400, having fallen more than 5 percent to a 6-week low of $2,269.50. Nickel stocks rose 564 tonnes to a new record high at 162,270 tonnes, while zinc inventories added 1,100 tonnes to 491,200 tonnes - the highest since October 2005. Battery material lead ended at $2,237 from $2,255, while tin finished at $17,775 from $17,750.