Copper hits 2-week low

Copper hit a two-week low on Friday, extending the first-quarter's 2.4-percent loss as a lull in Chinese demand worried investors, and as strength in the dollar eclipsed economic optimism supported by US jobs data.

Three-month copper on the London Metal Exchange was $9,345 a tonne at 15:20 SA time and hit a session low of $9,316.25, from

$9,430 at the close on Thursday. In the first three months of the year it recorded its first quarterly loss since June.

U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, marking a decisive shift in the labour market that supported sentiment towards the economy and metals demand.

“The survey today should help things,” Charles Kernot, an analyst at Evolution Securities, said.

But he added that investors remained worried about the demand picture.

“People are still nervous,” he added. “It's still a very fragile market.”

Though upbeat for sentiment, the data also propelled the dollar higher versus a basket of major currencies, removing some support from metals by making them costlier for non U.S. investors.

Base metals have been knocked this year by turmoil in the Middle East and North Africa, which has boosted oil prices and stoked inflation concerns, and by the earthquake, tsunami and nuclear disaster in Japan.

Japan's nuclear and humanitarian crisis is in its third week, with radiation still leaking from a crippled nuclear power plant, thousands of homeless people struggling to rebuild their lives, and little hope exists of a quick resolution to either.

STOCKPILES

Hefty copper stockpiles in China have slowed demand from the world's top metals consumer, compounding concerns about weak physical demand and keeping prices in a tight range. Imports of refined copper fell 36 percent to a 27-month low in February, recent data showed.

Latest data shows LME stocks of copper fell 1,000 tonnes to total 438,850 tonnes, but have been steadily climbing since December.

There has also been market talk that China's State Administration of Foreign Exchange (SAFE) had issued a notice that changes the rule on using copper to finance loans.

One trader said it was unlikley that the rule would be made retroactive, but if it was then “you're going to see an awful lot of liberated copper pretty quickly”.

Longer-term analysts are still positive about the outlook for copper, especially because there is a deficit.

“In the short term supply is going to be fairly tight,” said

Peter Archbold, European head of basic materials at Fitch Ratings. “I'm very positive about copper this year. It could get closer to $11,000 a tonne due a deficit in supply.”

Aluminium was $2,619.25 a tonne, from $2,645 at the close on Thursday.

Zinc was $2,338.75 a tonne from $2,362 at the close on Thursday and battery material lead was at $2,688.50 a tonne from

a close of $2,695.

Tin was $31,600 from $31,800 a tonne. Nickel was at $25,564 from $26,095 a tonne. – Reuters

(Source: http://www.iol.co.za/business/markets/commodities/copper-hits-2-week-low-1.1050892)