Copper fell on Friday as the dollar extended gains after US jobs data beat expectations, but losses were limited by a strong oil price and hopes that Chinese government policies will boost demand. US job growth rose solidly in January and wages rebounded strongly, data showed. The news put the possibility of a mid-year interest rate increase back on the table, boosted the dollar and made dollar-priced metals costlier for non-US investors.
Three-month copper on the London Metal Exchange (LME) ended at $5,650 a tonne, down 1.22 percent, after modest gains on Thursday. In the year to date the price is down some 10 percent. Still, copper gained nearly 3 percent this week, its biggest weekly gain since August, as it rebounds further from a 5-1/2 year low of $5,339.50 a tonne hit last week. The rally in oil held on Friday, with the commodity heading for its best two weeks since 1998 and leading some investors to buy into commodity funds that include copper.
Investors are also reassessing the outlook for global economic growth and demand, especially from China which consumes 40 percent of world refined demand. "We expect global demand for copper to remain robust. Chinese demand for copper is expected to benefit from stimulus policies, especially in those industries related to green energy, for example, renewable power, electric vehicles," Nic Brown, head of commodities research at Natixis, told the Reuters Global Base Metals forum.
Daily LME data showed copper stocks remain around 60 percent higher than at the beginning of the year. Commerzbank said the rising supply news was already accounted for in the historically low copper price. "Although supply is still being expanded, demand is likewise solid. We attribute the increase in stocks in part to financing and hedging positions being wound up. We see only a limited impact on the price because the changes to stock levels have lost much of their influence," said the bank.
In industry news, world No 1 copper producer Codelco and workers at its Ministro Hales mine have struck a deal on collective contracts, including wage increases and benefits, that will last nearly four years, the Chilean state-owned company said on Thursday. Aluminium ended down 0.80 percent at $1,870 a tonne, zinc ended 0.86 percent higher at $2,163, lead closed at $1,853 a tonne, up 0.27 percent and nickel ended up 0.33 percent at $15,200.
Tin closed down 2.43 percent at $18,500. "Indonesia's efforts to dictate the tin market look increasingly futile as China finds a new source of tin ore ... However the bigger picture is still of a relatively tight market, which should boost prices later this year," said Capital Economics in a note.