Copper hit a three-month high on Friday as concerns about demand from top consumer China receded and supply disruptions reinforced expectations of potential shortages this year.
However, traders expected subdued trading ahead of a monthly jobs report from the United States, the world's largest economy, later on Friday.
Benchmark copper on the London Metal Exchange touched $9,789.75 a tonne, the higehest since April 12. The metal used in power and construction was trading at $9,745 a tonne at 12:45 SA time from Thursday's close at $9,740.
One of the triggers for copper's rise this week was the perception that China's third rate hike this year would probably be the last in a series aimed at reining in inflationary pressures.
“Weaker Chinese manufacturing data helped, it gave the market some confidence that China wouldn't continue tightening over the rest of the year because we have now seen an impact on activity,” said Gayle Berry, analyst at Barclays Capital.
China accounts for nearly 40 percent of global copper consumption estimated at about 21 million tonnes this year.
Factory activity in China grew at its slowest pace in 28 months in June.
“There is a feeling in the market that the worst is behind us,” Berry said. “Supply side disruptions are also helping copper ... The copper supply side is looking very weak this year and is vulnerable to these types of disruptions.”
One disruption involves Freeport Indonesia , where workers may extend for a further week a strike that has crippled copper output at the huge Grasberg mine if talks with management on Friday do not bring a deal on pay.
INVENTORY DYNAMICS
In Chile, workers at Codelco's top two operations, Chuquicamata and El Teniente, ratified plans to strike for 24 hours next Monday to protest against an overhaul of the country's giant state mining company.
“This poses an upside price risks for copper,” Credit Suisse Private Banking said in a note. “LME inventory dynamics continue to point to strengthening end use demand, which bodes well for metals prices.”
Stocks of copper in LME-registered warehouses at 461,850 tonnes are the lowest since April 21 and down more than 3 percent since a year high of 477,925 tonnes on June 9.
Lead inventories at 308,300 tonnes, the lowest since late April, are also in the spotlight and helping to support prices of the battery metal.
Three-month lead was trading at $2,720 a tonne from $2,720 a tonne at the close on Thursday when it saw $2,730 a tonne, the highest since April 13.
“The world's largest lead-only mine, Magellan isn't going to be operating this year at all, that is clearly price supportive,” Berry said.
Canadian miner Ivernia Inc said in April it was placing its flagship Magellan lead mine in Australia under full care and maintenance for an indefinite period.
“The concerns about the impact of the closures of the battery plants in China have started to ease, we are seeing battery manufacturing plants restart,” Berry said.
Aluminium was at $2,578 a tonne from Thursday's last bid at $2,590. Zinc was at $2,391 a tonne from $2,412 on Thursday.
Traders said momentum buying pushed tin up to $27,650 a tonne, its highest since June 1 and nickel to $24,299, the highest since May 19.
Tin was last at $27,500 a tonne from $27,540 at the close on Thursday and nickel at $24,146 from $23,900. - Reuters