Copper rose to its highest in a week on Friday, lifted by falling inventories and Shanghai and Chinese buying, while US jobs data had marginal impact. Although the data came in slightly better than expectations, it made little impression on the metals market.
US employers added 94,000 jobs in November and the national unemployment rate held steady at 4.7 percent. US consumer sentiment, on the other hand, soured for a third consecutive month but a modest rate cut expectation from the US Federal Reserve next week remained intact.
The benchmark future in copper for delivery in three months at the London Metal Exchange rose as high as $6,950 per tonne, its highest since November 30 and was closed at $6,911, up $186 from Thursday. Aluminium was up $34 at $2,482.
"Copper seems to be rising on the back of technicals and falling Shanghai stocks have lent some support," analyst Leon Westgate at Standard Bank said. Shanghai copper stocks fell 6,836 tonnes this week, slightly above market expectations, marking the third 20-percent fall in as many weeks.
Stocks have fallen 70 percent since June to 27,602 tonnes, equivalent to about 2.5 days of China's consumption. "Copper has been pretty solid in the last 3-4 days," analyst Michael Jansen at J.P. Morgan said. "At current levels, close to $7,000 per tonne it is attractive to import in China."
Chinese demand for metals may support the market in the longer term but for now fears about the outlook for the US economy, and what a slowdown might do to industrial use of copper, dominate the market. "The (US) data had a marginal impact so far. Dollar's very much on the back foot following the data. The move we see is a dollar story," Jansen said.
The rate-setting Federal Open Market Committee is set to meet Tuesday, and Wall Street widely expects policy-makers to cut the benchmark interest-rate target by a quarter percentage point to 4.25 percent.
"Investors fear that demand for base metals could slow dramatically if the US goes into recession," Sven Streitmayer, analyst at Landesbank Baden-Wuerttemberg, said. "Even assuming a further slowing of US metals demand, the strength of consumption in other parts of the world means that supply will continue to struggle to keep up," Barclays Capital said in a report.
Lead, which plunged by 8 percent on Thursday on an outlook of increased supply should Canada's Ivernia restart shipments from its Magellan mine next year, was down $20 at $2,675 a tonne. Steelmaking raw material nickel jumped more than 5 percent or $1,350 to $27,400 per tonne, lifted by bargain hunting. Zinc was $40 higher at $2,430 per tonne, and tin was $100 firmer at $16,700/16,750.