Copper falls; nickel hits lowest level since June 25

02 Aug, 2014

Copper dipped on Friday after Chinese data showing manufacturing growth was not enough to outweigh prospects for slowing economic growth and a weaker-than-expected US jobs report. US jobs growth slowed in July and an unexpected rise in the unemployment rate pointed to some slack in the labour market that could give the Federal Reserve room to keep interest rates low for a while.
London Metal Exchange copper closed at $7,074.50 a tonne from Thursday's $7,115 close.
China's official manufacturing purchasing managers' index (PMI) rose to 51.7 in July, the strongest reading since April 2012 and up from 51 in June, the National Bureau of Statistics said on Friday. Economists had expected 51.4.
"The difficulty in getting excited about this news is that we knew it was coming," Nic Brown, head of commodities research at Natixis, said.
The International Monetary Fund had said on Thursday that China should lower its growth targets for next year as part of a push towards safer and more sustainable growth in the world's second-largest economy, which accounts for around 40 percent of world refined copper demand.
Nickel prices fell to their lowest in more than a month on Friday as inventories rose, but the metal later clawed back some of those losses.
Three-month nickel on the London Metal Exchange closed at $18,405 a tonne, having hit a low of $18,305 in morning trading, its weakest since June 25. It closed at $18,500 on Thursday.
Nickel stocks in LME-approved warehouses rose by 1,830 tonnes to a record 317,628 tonnes, LME data showed on Friday.
In other metals, aluminium closed at $1,975 a tonne from $1,992 at the close on Thursday.
Aluminium is up around 18 percent from a 4-1/2-year low hit in February of $1,671.25 a tonne as the market outside of China moves into deficit on producer cutbacks after a long period of oversupply.
"We expect the market outside of China to remain in deficit through the next five years and possibly beyond," said Eoin Dinsmore, senior aluminium consultant at CRU Group.
In LME-approved warehouses, data on Friday showed aluminium stocks were down 6,750 tonnes, while in Shanghai stocks fell 0.8 percent this week to 375,117 tonnes.
Zinc, the top performer in July with a gain of 6.5 percent, closed at $2,338 a tonne from $2,355 on Thursday. The metal hit $2,416 on Monday and again on Tuesday, the strongest level since August 2011.
Goldman Sachs said in a note to clients a short-term pull-back in zinc was likely, given that the recent rally would push producers to make more metal, plus China was not likely to import because of unfavourably high global prices.
Still, given the prospect the market could tighten up next year, "a reasonable short-term pull-back should make for a strong buying opportunity", it added.
LME tin closed at $22,475 a tonne from $22,850 on Thursday and lead at $2,220 a tonne from $2,226.

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