US copper futures managed to close in positive territory on Friday despite renewed recessionary fears in the US after data showed the largest drop in non-farm payrolls since March 2003.
Copper for May delivery settled up 1.80 cents at $3.9215 per lb on the New York Mercantile Exchange's Comex division, rebounding from a session low of $3.8560 after the release of the weaker-than-expected jobs report. The Labour Department on Friday said 63,000 non-farm jobs were eliminated last month on top of an upwardly revised loss of 22,000 jobs in January.
In addition, the department cut in half the jobs added in December to 41,000 from 82,000 it estimated a month ago in a move that underlined the steady deterioration in the nation's labour markets. Copper, typically seen as a barometer of economic activity, relinquished its gains and turned lower following the release of the weaker-than-expected payroll data.
"People were of course expecting somewhat weaker figures, but not to the extent of what we saw, and that is definitely taking a little bit off of the copper price," said Catherine Virga, market analyst with CPM Group in New York.
However, the metal's negative reaction was mild at best, actually creating an opportunity for willing participants to buy in at the slightly lower levels. "Copper has been holding up better than anything," said Steve Platt, futures analyst with Archer Financial Services in Chicago, citing a possible unwinding of LME/Shanghai spread prices.
"I think a lot of people have been long the Chinese market and probably short the LME, and what might be helping hold the market together is just unwinding of some of that arbitrage by some of the hedge funds," Platt said. Fundamentally, the market should continue to find firm underlying support from steadily declining stockpiles in London warehouses.
London Metal Exchange copper warehouse stocks declined by 1,525 tonnes, bringing total stock levels to 134,275 tonnes enough for less than three days' worth of global consumption.
Weekly Shanghai copper stocks rose 3,955 tonnes to 52,840 tonnes, more or less in line with market expectations. Looking ahead, another wave of copper deliveries from China could be ready to hit the market, as surging London prices spur exports from the world's largest consumer of the metal.
Final estimated futures volumes on Comex totalled 12,465 lots, down from Thursday's official count of 17,300 lots. Open interest in the market fell 997 lots to 102,277 contracts open as of March 6. London copper for delivery in three-months on the London Metal Exchange settled at $8,545 per tonne, up from low of $8,451, but down from $8,560 at the close on Thursday when the metal hit a record high of $8,820 a tonne.