Copper rose on Friday, helped by bargain hunting and consumer buying in China, and as concern over the impact of the potential bankruptcy of Cyprus eased after it agreed with Greece on the take-over of Greek units of Cypriot banks. Copper prices were still heading for the biggest weakly drop in three, however, as bankruptcy in Cyprus remains a real risk.
Three-month copper on the London Metal Exchange closed at $7,655 a tonne from $7,580 at the close on Thursday, reversing losses from the previous session, when it fell half a percent. Copper prices fell 1.1 percent this week, in the biggest decline since late February. Prices hit a seven-month trough at $7,486.25 a tonne hit on Tuesday, and are still down around 4 percent on the year. "We've seen consumer buying not just in China but also Europe and the US, but I don't see consumers having need to chase prices really. Inventories are rising everywhere and mine supply is picking up strongly," said Citi analyst David Wilson.
Copper price falls this week triggered some restocking by Chinese consumers, but concerns over euro zone contagion have eclipsed rising demand, both from top consumer China and in the US housing market. "It's fairly apparent people aren't making the orders they need to for a resumption in demand. The right outlook for copper is neutral to bearish. The market focuses on what is happening in Europe," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm.
Data earlier showed German business morale fell in March, breaking a four-month run of gains, as Cyprus troubles reignited concerns the euro zone debt crisis could weigh on Europe's largest economy. On the plus-side though, a preliminary survey of factory managers out Thursday showed solid first-quarter growth in China, while in the US, data showed jobless claims trending lower and factory activity and homes sales both on the rise.
Still, LME copper stocks have climbed to their highest in nearly 10 years, the latest data showed, rising 5,025 tonnes to 562,475 tonnes, which is the highest since October 2003. LME inventories have more than doubled since the start of December, in part because Chinese smelters have exported more of their record domestic stockpiles, helped by a change last year in export rules.
China exported 64,781 tonnes of copper in the first two months of this year, almost a quarter of last year's total. Exports in 2012 grew 75 percent from the year before. Tin closed at $22,925 a tonne from $22,595, while zinc closed at $1,952 from $1,934. Lead closed at $2,189 a tonne from $2,172.5, aluminium at $1,947 from $1,928 and nickel closed at $17,145 from $16,895.
