LONDON: Copper prices bounced on Friday, supported by a softer dollar after weak US jobs data and revisions to forecasts showing diminished supply after mine disruptions.
Three-month copper on the London Metal Exchange (LME) rebounded 1.5% to $9,913.50 a metric ton by 1620 GMT after easing by 1.3% in the previous session.
Copper extended gains in the European afternoon after a slide in a dollar index on the back of US jobs data that came in weaker than expected.
A softer dollar, which hit three-week lows, makes commodities priced in the US currency cheaper for buyers using other currencies. Despite Friday’s gains, LME copper was set for its first decline in five weeks, slipping about 0.5%, after touching a two-year peak of $10,208 on Tuesday.
“There’s a strong backdrop and sentiment has clearly shifted massively for copper and other metals. The question is has copper been a little over-stretched on the upside?” said WisdomTree commodity strategist Nitesh Shah.
He cited numbers this week from the International Copper Study Group, which made a sharp cut to its estimate for a global surplus this year, to 162,000 tons from the 467,000 tons forecast in October.
“As the year progresses and we see more supply disruptions and strong demand, especially from China on power grid spending, we could see that going into a deficit again,” Shah said.
Any correction or consolidation would be likely to last for a matter of weeks before prices resumed an upward trajectory, he added. Metals volumes were lighter than normal because of Chinese markets being closed for the Labour Day holiday from May 1-3.
“As Chinese markets reopen on Monday (May 6) after the holiday, we believe that any sustained risk-off mood could exacerbate declines due to increased market activity,” Sucden Financial analysts said in a note.
LME zinc was the weakest performer, adding 0.7% to $2,906.50 a ton after news that Sweden’s Boliden will restart production at its Tara zinc mine in Ireland in the third quarter.
LME nickel gained 3% to $19,215 a ton, shrugging off LME inventories that reached their highest level in 15 months, having surged by 73% over the past five months.
In other metals, LME aluminium climbed 1.1% to $2,556 a ton, lead advanced 1.6% to $2,215 and tin surged 3.1% to $31,935.
Source: Brecorder
