Copper fell on Friday due to a stronger dollar, bucking a trend in surging global equities markets as commodities investors worried about increasing supply of the metal and lower demand. China's commodity imports were surprisingly weak in February, falling 15.2 percent from a year earlier to 13-month lows, customs data showed on Friday. Its monthly imports of copper fell to their lowest in 20 months as importers cut term shipments because of the Lunar New Year holiday.
China is the world's biggest consumer of most commodities, including base metals. Three-month copper on the London Metal Exchange was untraded at the close, bid at $7,740 from a close of $7,765 on Thursday, giving back gains after briefly rising into positive territory following the release of US jobs data. US employers stepped up hiring in February, pushing the unemployment rate to a four-year low, suggesting the economy is gaining traction.
World shares, by contrast on Friday, hit their highest level since June 2008 and the dollar touched a 3-1/2 year high against the yen. "What really strikes me most is how the base metals market is behaving entirely differently from stock markets," BNP Paribas analyst Stephen Briggs said.
"Copper's outperformance of the last 10 years has been 150 percent a supply story and not a demand story. It's still a supply story, but that supply story is changing in the sense that we are now seeing stronger supply growth, which is why copper is struggling." New supply of copper, as mining projects around the globe come on stream, is expected to bring the market into a surplus of 120,000 tonnes in 2013, compared with earlier forecasts of a 12,000 tonne deficit this year, and the surplus is forecast to widen to 295,568 tonnes in 2014, according to a poll by Reuters.
After years of a shortfall, the market is awash with copper. Total exchange stocks, comprising metal registered with the LME, COMEX and the Shanghai Futures Exchange, have mushroomed by 53 percent to 706,000 tonnes in the space of just three months. They are now at their highest level since May 2010.
The dollar's rise also damaged copper prices. A stronger dollar makes metals more expensive for holders of other currencies. In other metals, three-month tin ended at $23,795 from $23,655 at the close on Thursday, lead closed at $2,212.50 from $2,211 and aluminium xxx from $1,979.
Nickel ended at $16,740 from $16,650 and zinc closed at $1,975 from $1,990 at Thursday's close. "Zinc looks to be the most interesting as it is currently hugging its 200-day moving average at $1,967.50," RBC said in a research note. "With relative strength indicators starting to point higher from an oversold condition, it's probably a sign we may look for some zinc upside."