London Metal Exchange (LME) metals ended mixed on Friday, with the market nervous ahead of a long weekend in Europe, traders said. Towards the close LCH.Clearnet announced sharp increases in margins, which traders said were to protect the clearing house against the increased risk of defaults amid surging volatility.
"Anything can happen with Japan and New York open on Monday," an LME trader said.
The LME will be shut on Monday for the May Day holiday, re-opening on Tuesday.
"It is guaranteed that there will be a move over the weekend, but we don't know which direction it is going to go," a second trader said. Copper was volatile throughout, closing at $7,000 a tonne, down $55, amid late liquidation.
However, supply disruptions lent support to the market, with around 200 workers at Canada's Falconbridge Ltd Lomas Bayas copper mine in Chile deciding to strike.
Besides the potential for supply disruption, labour availability remained a key longer-term issue, UBS said in a report on Friday.
"Given the secular decline that the mining/steel sector has experienced over the past 20 years, it is no surprise that the pool of experienced labour has collapsed."
Phelps Dodge Corp forecast an average copper price of $3.00 per lb or higher for the second quarter given a strong demand outlook, low inventories and continued strong interest by investment funds, it said on Thursday.
Aluminium ended at $2,760 versus $2,747. The Chinese interest rate rise on Thursday should help to ease some of the upside pressure on prices seen lately, a Barclays Capital report said on Friday.
"In fact, tougher control measures should help constrain over capacities in the aluminium and copper smelting/refining business, which could actually turn into a positive development for metals prices," it added. Zinc was down at $3,175 against $3,200, while lead closed at $1,212, against $1,210.
Lead had been the strongest performer on Thursday, when the rest of the market traded lower. But near-term trends pointed sideways, a Triland report said on Friday.
"Heavy resistance on approach to $1,260 is limiting re-emergent strength but, equally, good demand in the $1,125/35 region has contained pull-backs of late and suggests prices are still reasonably well supported."
"Lead just cannot get out of a range really, it needs to get through $1,250 in order to move higher," an LME trader said. Nickel was $500 higher at $19,300, while tin was at $9,450 against $9,200.