NEW YORK/LONDON: Copper rose on Friday, supported by hopes that recent stimulus measures from around the world will boost liquidity and metals demand in a struggling global economy, especially in top raw materials consumer China.
Despite the firmer finish, copper failed to push higher on the week, snapping back-to-back weekly gains, as weaker-than-expected data from the United States, Europe and China capped a powerful rally that saw prices of the red metal surge nearly 14 percent since early August.
"We've skimmed a little froth out of the market in the sense that it probably got a little bit over-bought within a very concentrated period of time against a background of global easing," said Michael Turek, senior director on Newedge's New York metals desk.
"But I don't see anything destructive in the fact that we are still knocking around $8,300. I would call that mildly constructive."
On the London Metal Exchange (LME), three-month copper ended up $16.50 at $8,281.50 per tonne.
Earlier in the week, it hit a 4-1/2 month high of $8,422.
In New York, the COMEX December contract rose 3.00 cents to settle at $3.7890 per lb, after dealing between $3.7705 and $3.8095.
It held within 2 percent of its own 4-1/2-month peak at $3.8395, hit on Wednesday.
Copper, alongside the broader financial market, has rallied on expectations and then confirmation of quantitative easing (QE) in Europe, the United States and Japan together with infrastructure projects in China.
"The physical markets and the fundamentals really don't necessarily justify the rally, so the market's having second thoughts," said analyst Leon Westgate at Standard Bank in London.
"The rather volatile, generally sideways trading we've seen is reflective of that - as the market digests QE versus the still lacklustre economic backdrop."
Westgate said he was not a buyer of base metals at current levels based on fundamentals, but was cautious since commodity prices often ignore fundamentals for periods of time.
LME copper stocks increased by 2,775 tonnes this week and Shanghai inventories jumped by 10,428 tonnes.
Still, the global refined copper market was facing a deepening production deficit this year.
In its latest monthly bulletin, the International Copper Study Group (ICSG) said the market stood in a 473,000-tonne deficit in the first half of this year, compared with a deficit of 131,000 tonnes in the first six months of 2011.
LEAD HITS FRESH PEAK
In other metals, lead futures touched their highest in nearly eight months as LME inventories continued to fall. Three-month lead rose 1 percent to finish at $2,288 per tonne after touching a peak of $2,299.75, the strongest since Jan. 27.
LME lead stocks have fallen by about a fifth since late June.
In aluminium and tin, most of the tightness seen this week on nearby spreads has dissipated after the September contract expired.
The "tom/next" spread, representing the cost to roll over an expiring contract to the following day, in aluminium was down to a $6 backwardation from as high as $40 on Tuesday and in tin fell to $4 from $25 on Wednesday.
"Data shows that the supply demand situation on the base metals side is getting tighter. Copper is in a deficit and the aluminium and zinc oversupply situation is also tightening," said Daniel Briesemann, commodities analyst at Commerzbank in Frankfurt.
Three month aluminium firmed $5 to end at $2,115 a tonne and tin closed at $20,725 compared with a last bid on Thursday of $20,550.
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