Copper prices steadied on Friday, buoyed by expectations of stronger demand next year, further investment flows and a weaker dollar over coming months. Benchmark copper on the London Metal Exchange was untraded at the close but last bid at $6,845 from $6,790 a tonne at the close on Thursday. The metal used in power and construction earlier this week hit $6,992 a tonne.
Government fiscal packages - especially in China, the world's largest consumer of industrial metals - are expected to start feeding through into real demand next year. "The demand outlook for next year is very positive," said Gayle Berry, an analyst at Barclays Capital. "We're just getting the early feeling of what it's like for this fiscal spending to really feed through."
But rising stocks of copper in LME warehouses - above 420,000 tonnes, up more than 60 percent since the middle of July and the highest since April - will dampen sentiment. Traders said the market was talking about further deliveries into LME warehouses in Korea, which could be coming from China. Also on the radar is a bout of profit taking from hedge funds before their year end on November 30. Profits have to be realised before performance fees can be charged.
"Most of the selling will be before Thanksgiving (next Thursday in the United States), as I'm sure a lot of people will take the opportunity for a long weekend," a trader said. Stocks of aluminium at 4.59 million tonnes are still within touching distance of the record 4.629 million tonnes seen on September 16 and expected to cap prices of the metal used in transport and packaging.
But news that China will raise power prices for non-residential users by around 5.4 percent could help bolster aluminium prices. Aluminium ended at $2,060 versus Thursday's close at $2,031. Zinc was helped by the threat of falling supplies from China, partly because of a potential shortage of zinc concentrate from Australia.
The metal used to galvanise steel closed at $2,255 a tonne from $2,215, while battery material lead ended at $2,346 from $2,332. Tin was untraded at the close but last bid at $14,950 from $14,860 and nickel closed at $16,600 from $16,975. Nickel prices are down about 25 percent since hitting a year high in August because of rising stocks of the metal used mainly to make stainless steel. Stocks are expected to head for historical highs above 150,000 tonnes.