Copper rose on Friday, helped by a softer dollar and an investor focus on persistent concerns about long-term supplies of the metal, while much-awaited comments by Federal Reserve Chairman Ben Bernanke had little impact. Bernanke said it was critical for the health of the US economy to reduce unemployment but stopped short of signalling further action to boost recovery.
Three-month copper on the London Metal Exchange dipped briefly below $9,000 after the comments, but by the close it was $9,075 from $9,066 at Thursday's close. "Compared with the stock market, copper is pretty resilient. This has been the case for a few days now," said Stephen Briggs, an analyst at BNP Paribas.
"People are still buying into the story that there are supply side issues that won't go away regardless of how strong or otherwise the economy is going to be." BHP Billiton, the world's biggest miner, said on Wednesday recent market turbulence had not significantly dented demand. It saw a strong outlook longer term due to emerging market demand and barriers to supply expansion as miners battle funding constraints and labour and equipment shortages.
The global copper market is expected to remain in a deficit this year, although analysts in a Reuters poll last month shaved their predictions of the shortfall in light of the gloomy global economic outlook. A threatened strike in coming days at Freeport McMoran's Grasberg copper mine in Indonesia, the world's third biggest, has reinforced worries over supply tightness. Helping copper prices further, the dollar fell against a basket of currencies. A weaker dollar makes commodities priced in the US unit more attractive for holders of other currencies.
Highlighting firm demand and dwindling supplies, deliverable inventories of the metal in warehouses monitored by the Shanghai Futures Exchange fell 8.7 percent, or almost 10,000 tonnes to 102,258 from last Friday. "On the physical side, demand is gradually recovering," Kryuchenkov said.
"Stocks in Asia are moving down, spot premiums are holding up and the cash-to-three-month is moving towards a backwardation. These are all signs that demand is there." The copper cash-to-three-month contango - a discount for cash over three-month material - narrowed to $14.50 from $25.75 on August 3. Three-month aluminium closed at $2,378 per tonne from $2,361 at the close on Thursday.
Japanese shipments of aluminium products fell 4.8 percent in July from a year earlier to 170,916 tonnes, industry data showed on Friday, falling year-on-year for the second month in a row as the impact from the March earthquake was still felt. The country's output of rolled copper product also fell, dropping 4.1 percent in July from a year earlier, its second consecutive year-on-year fall, due to sluggish demand from auto and chip makers, an industry association said. Tin closed at $23,805 from $23,400, zinc at $2,246 from $2,228, lead at $2,485 from $2,401, and nickel $21,450 from $20,875.
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