Copper slips on strong dollarComment on this story
Copper prices slipped on Friday from a one-week high hit a day earlier following strong Chinese export data, with a slightly stronger dollar and uncertainty about the outlook for demand for industrial metals weighing on prices.
Benchmark copper on the London Metal Exchange slipped to $8,086.75 a tonne at 13:22 SA time, down 0.4 percent from
a close of $8,110 a tonne on Thursday.
It hit a one week high of $8,165 in the previous session after China's export growth rebounded surprisingly sharply to a seven-month high in December, but subdued global demand means the spike may not herald an enduring recovery.
“Looking further ahead into the second half of this year, there is the potential for Chinese growth to be weaker than some expect,” said Ross Strachan, economists at Capital Economics.
“I don't think the upturn in demand (for metals in the second half) will be as great or last as long as it has in recent times.”
Weighing on prices was a rise in the dollar against a basket of currencies. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies.
The metal used in power and construction, which gained more than 4 percent in 2012, hit its highest level in more than two months earlier in January following a deal by US lawmakers to avoid a “fiscal cliff” of spending cuts and tax increases.
But prices have since retreated on expectations that the US Federal Reserve may rein in easing measures sooner than expected, and caution ahead of more US debt ceiling negotiations that are set to take place in coming months.
“The fiscal cliff has passed but you have the issue of the debt ceiling looming and that it clearly is a downside risk for the market,” Strachan said.
LUNAR NEW YEAR
The market's focus remains on the outlook for demand from China, the world's top consumer of copper, with traders expecting Chinese purchases of metals to stay quiet until March when factories reopen following mid February's Lunar New Year holiday.
“I contacted some potential customers this week, all said they were busy with the year-end paperwork. Nobody really wants to talk about business. They all said wait till Chinese New Year is over,” said a Hong Kong-based trader.
Factory activity in China is likely to shut or slow operations for a couple of weeks around the holiday on February 10.
Benchmark zinc fell to $2,035.25 from Thursday's close of $2,038 while aluminium was at $2,119 from $2,114.
Lead slipped to $2,328 from a last bid of $2,333, tin climbed to $24,749 from $24,655 and nickel, was at $17,456 from $17,400. - Reuters