Copper eased but still recovered from two-week lows on Friday, supported by a weaker dollar and expectations of stronger demand this year from top consumer China and other industrial markets. Benchmark copper on the London Metal Exchange closed at $9,425 a tonne, compared with $9,470 at Thursday's close.
The metal used in power and construction had earlier fallen to $9,300 an ounce, its lowest since December 24, on talk of tighter monetary policy in China and the United States and a stronger dollar. But it recouped losses after a US report showed weaker-than-expected jobs growth.
"Everyone went into payrolls expecting quite a good number and that didn't materialise. The dollar has weakened quite a lot on that news, helping to take a lot of commodities higher, gold and copper included," Standard Chartered analyst Daniel Smith said.US non-farm payrolls showed the economy created far fewer jobs than expected in December, suggesting the Federal Reserve will complete its asset-buying programme, but the unemployment rate still dropped to its lowest in more than 1-1/2 years.
"It shows that the US is still facing severe problems, and it will take a bit of time before it recovers to pre-crisis levels," Commerzbank analyst Daniel Briesemann said, referring to the payrolls report. "There is a huge price increase potential for base metals in first quarter and in the first half of 2011. This is due to metals demand recovering not only in China, but in other industrial markets as well. Also there are still supply problems, especially for copper and tin."
Copper initially extended losses after the data but then pared them back as the euro recovered from a near four-month low against the dollar. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies. Also weighing on copper was the prospect of commodity index rebalancing, which could see large sales of copper after gains of more than 30 percent last year. "This may only have a temporary effect, but it does add to the negativity," an LME floor trader said.
Stocks of copper in London Metal Exchange warehouses at 379,525 tonnes are down more than 30 percent since the middle of February. But since December 9, they have increased by more than 8 percent. "Global (copper) inventories are low," Credit Agricole said in a note. "Lead demand is resilient due to replacement battery market - accounts for 40 percent of global lead consumption." Global consumption of lead is estimated at around 9 million tonnes and of copper at around 19 million tonnes.
Battery material lead closed at $2,649 a tonne from $2,656 a tonne at the close on Thursday, when the battery material touched $2,712.75 a tonne, its highest since May 2008 on concern about supplies from Australia. Aluminium closed flat at $2,518 a tonne. Zinc was at $2,445 a tonne from $2,455, tin was at $26,450 from $26,180 and nickel closed at $24,200 from $24,550 on Thursday.