Copper traded steady on Friday, paring earlier gains, as the euro dipped ahead of European bank stress tests and investors also eyed trends in top consumer China.
Three-month copper on the London Metal Exchange traded at $9,623 a tonne at 11:30 SA time from $9,630 a tonne at the close on Thursday.
Prices had climbed to $9,674 earlier in the session as the dollar briefly came under selling pressure after a warning from ratings agency Standard & Poor's, but the impact on the greenback was shortlived.
“The fiscal situation on both sides of the Atlantic is messy and may not be clarified for some time to come,” Nic Brown, head of commodity research at Natixis said. “With the number of banks that are rumoured to be struggling with the (European) stress tests, it is a big issue.”
A health check of European banks is expected to show on Friday that around 10 lenders need more capital to withstand a prolonged recession, as criticism grew that Europe has been too slow to repair the industry.
Ratings agency Standard & Poor's warned there was a one-in-two chance it could cut US ratings if no deal was reached on raising the government's debt ceiling.
President Barack Obama suspended US budget negotiations for the day Friday to give congressional leaders a chance to come up with a “plan of action” on how to unblock talks meant to cut deficits and avert a debt default.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 22.3 percent from last Friday, the exchange said on Friday.
“The bottom line is that in Shanghai premia have come off again, and demand is not as strong as it was. I think (China) probably hasn't gotten accustomed to high prices,” Michael Widmer, analyst at Bank of America-Merrill Lynch said.
“From the physical market you do hear that it is getting relatively quiet. Europe and the US may all have an impact but you are moving into the seasonally quiet period of the year, and that's one of the reasons why copper didn't continue to rise further.”
Copper inventories at LME warehouses were unchanged at 462,025 tonnes, latest data showed.
“DISCIPLINED TRADERS”
Looking forward, analysts are optimistic about copper's longer-term outlook.
“There is a healthy appetite for copper at the moment, but the Chinese are very disciplined traders - they like to buy but only at the right price. I think we'll see China buying on a purely hand-to-mouth basis and just waiting for dips [in prices],” said Citigroup analyst David Thurtell.
In London, the LME said that a warehousing firm with operations in one location storing more than 900,000 tonnes will from next April have to loadout a minimum of 3,000 tonnes per day and that companies which don't comply could be delisted.
In output news, production at Freeport McMoRan Copper & Gold's giant Indonesia mine gradually resumed on Thursday, as workers returned following a strike, and two cargoes carrying 65,000 tonnes of concentrate were ready for shipping on Friday, workers said.
Tin was at $27,300 from $27,425 a tonne while zinc , used in galvanizing was at $2,357.25 from $2,350 a tonne. Battery material lead was at $2,668.50 from $2,665 and aluminium was at $2,503.50 from $2,507. Nickel was at $24,025 from $24,210. - Reuters