Copper fell on Friday, after hitting a five-month high on Thursday, as the euro dipped on worries about Greece's bailout plan, but decent copper import numbers from China and signs the credit crunch in Europe is easing limited losses.
Copper imports by top consumer China fell 18.7 percent in January from December, with many factories shut during the week-long Lunar New Year holiday.
But the drop was in line with market expectations, and volumes at more than 400,000 tonnes signal still healthy demand.
Three-month copper on the London Metal Exchange fell 1 percent to $8,666 a tonne by 13:03 SA time from a close of $8,760. It hit $8,765 on Thursday, its highest since September 16.
“This is a classic example of buy the rumour sell the fact. We all thought the imports would be strong and they have been, so therefore people are now taking a bit of profit,” Standard Chartered analyst Daniel Smith said.
“I don't think this pullback is anything to worry about,” he said, predicting copper could hit $9,000 per tonne in the next couple of weeks.
Political parties in Athens struck a long-awaited deal on harsh austerity steps necessary for a second rescue, and a debt swap deal with Greece's private bondholders was almost finalised.
But final approval for the deal remains elusive, with euro zone finance ministers seeking further measures before Greece signs off on the bailout.
The uncertainty pushed the euro from its two-month highs versus the dollar, putting pressure on base metals prices. Gains in the dollar can pressure dollar-denominated commodities by making them more expensive for consumers using other currencies.
However, European Central Bank chief Mario Draghi flagged tentative economic improvement in the euro area.
“We had a pretty decent run up in copper, for two reasons. One is on optimism that there will be a settlement around Greece and the macroeconomic data has been generally quite good,” Smith said.
The market is also moving into a seasonally strong period, as the end of winter approaches and construction restarts in the spring. Copper is used widely in construction.
A recovering US job market has also lent support to copper prices, with the number of Americans signing up for unemployment benefits falling unexpectedly last week.
STOCKS
Inventories of metals held in LME-monitored warehouses have also been falling in most metals. Copper stocks fell 850 tonnes, according to data released on Friday.
“This is alleviating previous concerns that a slowdown in Chinese demand could trigger loosening supply/demand conditions in the world market,” Credit Suisse said in a research note.
“Overall sentiment has improved and further near-term price gains seem likely. However, for these gains to be sustainable, we would also need to see Chinese buyers return to the market.”
Tin was up 0.2 percent at $25,450 from $25,400. Indonesia said on Friday it will ban exports of some unprocessed metals, including copper, nickel, tin, bauxite and zinc, from 2014. The country is a major producer of raw materials.
Zinc, used in galvanizing was at $2,145 from $2,160.
Battery material lead was at $2,206 from $2,222 and aluminium was at $2,282 from $2,287. Nickel was at $21,474 from $21,540. - Reuters