Copper fell for a second-straight week on Friday, trading lower in reaction to Europe's escalating debt crisis and another round of data confirming a slowdown in top metals consumer China.
Copper bulls were dealt a serious blow on Friday after a string of data from China, including below-forecast industrial output, retail sales, fixed asset investment and copper production, suggested a further deceleration in growth from a region of the world that accounts for nearly 40 percent of the world's copper demand.
“This is certainly not helping the bull case,” said Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida.
“There's been this theme over the last few months of growth slowing in China, and it's now confirmed in the numbers.”
London Metal Exchange (LME) three-month copper shed $92 or nearly 1 percent to close at $8,013 a tonne.
In New York, the July COMEX contract ended down 4.25 cents at $3.6480 per lb, after dealing between $3.6165 and $3.6835.
For the month, copper prices in both London and New York have lost nearly five percent, slicing the year's gains in half.
COMEX copper volumes, at around 59,100 lots in late New York trade, slowed to almost a quarter below their 30-day average, according to preliminary Thomson Reuters data.
On top of the softer Chinese data, copper investors also had to contend with inconclusive election results in Greece this week that threw the country into
political disarray, as well as a huge trading loss from JPMorgan, whose failed hedging strategy rattled most risk asset markets on Friday.
But providing some salve was US consumer sentiment that rose to its highest level in more than four years in early May.
“When you see the Chinese data out today and the trade data yesterday, copper should be going lower,” said analyst David Wilson of Citi.
“But the tightness on the LME is probably supportive and every time it does get to the $8,000 a tonne level, consumers do appear to buy buying into that,” he added.
Latest data showed LME copper stocks climb 1,425 tonnes at 221,275 tonnes, near their lowest levels in 3-1/2 years. Shanghai's copper stockpiles fell 13 percent last week, though they remain elevated near a 10-year high of 227,276 tonnes hit in March.
Reflecting tight supply outside China, the cost to rolling short positions for nearby copper on a tomorrow/next day basis, for delivery next week, remains expensive at $3.77 on Friday, although down from a high of $13.00 earlier in the session.
With the prime prompt date for May next week Wednesday, costs to roll short positions could climb further, traders said, if metal for delivery can't be found.
In news, Poland's copper miner KGHM does not expect the average annual price of copper to drop below $8,000 per tonne, the group's Chief Executive Officer Herbert Wirth told Reuters on Friday.
INDO NICKEL
Across other metals, Indonesia plans to introduce new quotas to limit mineral exports, as well as a 20 percent duty on mineral exports by certain companies, Indonesian government officials said on Friday.
“(An) export tax will put a solid floor under LME nickel prices, but we don't see a supply shortage any time soon,” ANZ said in a research note.
Support also came as Vale, the world's second-biggest nickel producer, said on Thursday it would suspend sales and purchase agreements at its Goro project on the French Pacific island of New Caledonia after an accident at the mine's sulfuric acid plant.
Nickel closed up $30 at $17,195 a tonne.
In other metals, lead ended off $18 at $2,072 a tonne.
Doe Run Co restored its primary lead smelter in Herculaneum, Missouri, this week to its full production capacity of 130,000 short tons a year and is on track to meet its production target for May, a company executive said on Thursday. - Reuters