Copper closes down, fundamentals still questi
Copper futures closed slightly lower in London on Friday, struggling to build on strong gains made in the previous session as worries about demand returned to weigh on investors.
Copper started the day higher, benefiting from gains in Chinese equities, but the rally lost force as market attention drifted back to its concerns around the underlying supply and demand picture.
On Friday, Barclays Capital forecast a 344,000 metric tonne copper surplus, predicting that demand in China, Brazil, Russia and Europe would be lower than anticipated. The economic health of China in particular is concerning copper producers and investors, with the country responsible for over 45 per cent of the consumption of this metal.
"The recovery in commodity prices looks fragile with concerns over China's growth still weighing on market activity," said ANZ Research in a report.
The London Metal Exchange's three-month copper contract was down 0.1 per cent at $US5,135 a metric tonne at the PM kerb close, having hit a ten-day high earlier in the session at $US5,197 a tonne.
On Thursday, copper prices jumped more than 4 per cent as stocks in China closed strongly higher for the first time in five sessions. The moves into equity assets supported a broader move into other so-called risk assets, like oil and copper.
Copper, like other commodities, had fallen sharply earlier this week as the Chinese government battled to stem losses in its equity markets and underpin its increasingly fragile economic growth.
When markets recovered, gains in the price of copper have often been attributed to short-covering, rather than a more positive outlook for the market.
Some analysts think copper prices are likely to continue on a negative trajectory.
"With the fundamentals generally bearish we would see any strength as a counter trend move," said William Adams, head of research at Fastmarkets.
All the other base metals ended the week higher. Aluminium closed up 4.7 per cent at $US1,603 a tonne, zinc was up 3.1 per cent at $US1,806.50 a tonne, nickel was up 0.1 per cent at $US10,075 a tonne, lead was up 3.2 per cent at $US1,732.50 a tonne and tin was trading up 2.6 per cent at $US14,250 a tonne.