Copper prices fell on Friday, under pressured from a drop in the euro against the dollar, with trading volumes reduced by the absence of consumers in China where the market is closed for the Lunar New Year holiday. Three-month copper on the London Metal Exchange (LME) closed down 1 percent at $5,693 a tonne.
The metal, used in power and construction, dropped 0.7 percent this week. Analysts expect limited price movement until post-holiday trade revives in China. Markets in China, which consumes roughly 40 percent of global refined copper, will reopen on February 25. "We are quite positive on the outlook for copper prices. It will be those first few weeks after the Lunar New Year when we're hoping to see demand picking up," said Caroline Bain, senior commodities economist at Capital Economics.
"If that doesn't seem to happen then we might have to rethink our view. So the next few weeks will be critical." The number of open forward copper contacts on the LME surged to a record ahead of the Lunar New Year, with most investors betting that dwindling supplies will push up prices despite slower demand from China.
Putting pressure on metals prices, the euro fell against the dollar for a third consecutive day before a meeting of euro zone finance ministers on Greece's request for a six-month loan extension, although it pared losses in the afternoon. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies. Nickel dipped 0.1 percent to close at $13,955 a tonne after touching a fresh one-year low of $13,873.
"Below $13,900 there is interest, but I am waiting until China reopens," said a physical trader in Singapore. Aluminium ended down 1.4 percent at $1,793 a tonne, the weakest in over a month. Surcharges for physical aluminium in Europe are finally falling from record levels hit in recent years, weighed down by Chinese exports, sluggish demand in Europe and material from financing deals moving back onto the market.
A cyclone in north-east Australia will pass close to Rio's Gove bauxite mining operation. It also threatens to disrupt BHP Billiton's Groote Eylandt manganese mine and Glencore's McArthur River zinc and lead mine, giving some support to other metals. Zinc finished down 1.3 percent at $2,050 a tonne after touching a one-month low, lead dropped 1.5 percent to end at $1,772, also the weakest in a month, while tin shed 1.5 percent to close at $17,900.