Friday, January 05, 2007

Copper for delivery in three months ended the official LME ession at $5,750 per tonne, up $20 from Thursday's kerb close.

At around $5,700, copper is 35 percent below its peak of $8,800 in May last year but still more than double its price three years ago.

"Copper has moved away from the lows aided by consumer bargain hunting and a further rise in cancelled warrants," UBS metals strategist Robin Bhar said.

Cancelled warrants, which indicate metal will soon leave warehouses, stood at 17,325 tonnes on Friday, up from around 6,000 at the beginning of the week.

Analysts said users of copper in China, the biggest consumer of the metal, would be looking to pick up supplies after the big price drop.

Other market sources said Chinese consumers would remain cautious, expecting further falls in prices.

"Chinese fabricators are not willing to buy large volumes of copper," said Zhou Yixing, a senior trader with Jiangsu Suwu Futures.

Copper's fall has come against a backdrop of worries about slowing global growth prospects and rising supply of many key industrial commodities.

"I am a trend-follower and I am very happy to be so in markets like this. I would hate to have to try and work out the fundamental outlook for these things," a U.S. fund manager said.

"People need a clearer picture. The employment numbers are due later and traders tell me they are not going to touch anything until then."

U.S. non-farm payrolls data for December are due at 1330 GMT, with analysts predicting a rise of 100,000 jobs.

"Copper prices have been falling since mid-December as sentiment deteriorated against rising LME inventories and a perception of slowing demand, especially in the USA," said Peter Richardson, chief metals economist at Deutsche Bank.

Stocks in LME-registered warehouses, seen as a gauge of demand, have risen by more than 12,000 tonnes this week. Another 1,700 tonnes entered stores on Friday, taking the total to 194,875, the highest since March 2004.

Stocks in Shanghai Exchange warehouses fell 257 tonnes in the week ended Thursday to 31,043 tonnes.

Nickel stocks fell 150 tonnes in London on Friday to 6,084 tonnes, just over 1.5 days of global consumption, while the premium for cash metal, or backwardation, flared to $900/1,100 a tonne, from $700 at the end of 2006.

Nickel ended the official session at $33,900, down $300.

Aluminium was down $20 at $2,680 and zinc was down $35 at $4,050.

Tin was indicated at $10,795/10,800, down $80 from Thursday's last quote, and lead was at $1,660/1,663, down $25.

Mining stocks Xstrata and Rio Tinto were lower by early afternoon in London, all three declining more sharply than the FTSE 100 index.

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