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LME copper closes unchanged; Nickel down as inventories rise |
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London Metal Exchange base metals were mixed Friday, supported by stronger-than-expected U.S. non-farm payrolls data, and further gains are expected next week, said market participants.
The strength of the non-farm payrolls data helped to lift the base metals complex up from its lows, said analysts. Although a sharply higher dollar will cap any major upside momentum – making dollar-denominated products such as metals more expensive for foreign buyers – the data provided further evidence the U.S. economy has picked up considerably after several subpar quarters, a positive for metals demand, said analysts.
Non-farm payrolls increased 132,000 in June, up slightly from forecasts for a 128,000 rise, though down from May's revised 190,000 increase. May's revised number swelled, giving the dollar an immediate boost. The unemployment rate remained steady at 4.5%, as expected.
Three-month copper fell slightly Friday due to end-of-week profit-taking, said Robin Bhar of UBS, but remains firm. Copper gained 3.7% from the week's low.
Adding to copper's price support, LME inventories Friday stood at 105,475 metric tons, down roughly 13% from month-ago levels.
In addition, ongoing supply concerns have supported prices. These concerns include protests by workers at Chilean mining giant Codelco's operations, a 24-hour nationwide walkout by miners in Mexico and a three-week strike at Xstrata's Canadian Copper Refinery near Montreal.
Elsewhere, a hefty 276 ton inventory build in LME nickel pressured prices Friday with the metal falling below the $36,000/ton price level. LME nickel stocks are up 8.8% from month-ago levels, at their highest level in over a year.
Ongoing concerns of demand destruction, particularly in the stainless steel industry, is also weighing on price sentiment. Stainless steel producers are the largest consumers of nickel.
Meanwhile, three-month zinc and lead were well supported following a drawdown in LME inventories. The positive price sentiment should continue next week, said Bhar.
LME zinc stocks are down nearly 2.5% from two weeks ago while lead stocks are down 1.5% during the same time frame.
In other news, Rio Tinto shares in London fell Friday in the wake of a report the world's second-largest mining group plans to gatecrash a $28 billion hostile bid battle between the aluminium giants Alcan Inc. of Canada and the U.S.'s Alcoa Inc.
The world's largest aluminium company, United Company Rusal, is negotiating terms with six banks ahead of a London flotation. The Russian group is finalizing roles on the deal with Morgan Stanley, Deutsche Bank, JPMorgan, UBS AG, Credit Suisse and Goldman Sachs.
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