Copper rose away from one-month lows on Friday, boosted by US new homes and consumer data, with a surprise fall in global inventories also supporting. Copper for three-month delivery on the London Metal Exchange closed at $5,990 versus $5,950 a tonne on Thursday. Earlier the metal, used in power and construction, touched $5,900, its lowest since August 19.
Prices were extremely volatile in the second half of the session, as a flurry of data kept investors guessing on the demand outlook. US consumer sentiment rose to its highest since January 2008 and new home sales hit their peak in nearly a year. But US durable goods data was weaker than expected.
"Like any turning point in an economic cycle, some data disappoints and some surprises to the upside," said David Thurtell, and analyst at Citigroup. "It will be months, possibly next year, before we get consistently bullish economic data." "With the LME having priced in the recovery already, the economic data is playing catch up."
Further on the upside for copper prices, data showed inventories in warehouses monitored by the Shanghai Futures Exchange fell 5.3 percent from a week ago, after peaking the prior week at their highest in more than five years. In London, data showed stocks down 175 tonnes, but at 340,700 they are still over 30 percent above mid-July levels.
Copper also got support from a pledge by G20 leaders to keep stimulus measures in place until the recovery is more entrenched. "We're bound to recover at some point but for the next six to 12 months anything can happen. Demand isn't great and there is excess material out there," said an LME-based trader.
The copper price has roughly doubled this year, mostly due to speculative buying, improved macro-economic data and record Chinese import buying, which is now expected to fall. Data this week showed China's refined copper imports fell by a quarter in August from July, the second month in a row the world's top copper consumer had cut purchases.
The fall has swelled LME inventories and triggered worries demand outside China will not pick up quickly enough to make up for the expected slack in Chinese imports. Aluminium ended at $1,815 a tonne from $1,840, having earlier hit $1,802 to match September 14's near two-month low. Latest LME data showed stocks fell 4,450 tonnes but remained near a record 4.6 million tonnes.
"All risky assets at the moment are correcting, it's difficult to see why aluminium wouldn't follow given how high stocks are," said Jesper Dannesboe, senior commodity strategist at Societe Generale. Zinc closed at $1,880 a tonne from $1,864, battery material lead at $2,185 from $2,171, while steel-making ingredient nickel ended at $16,900 from $17,100. Tin closed at $14,400 from $14,350. A dominant position holding more than 90 percent of stock warrants and cash contracts in tin has pushed up the premium for cash material over the three-month price to $700.