Zinc hits 13-1/2 month high, lead hits 16-month high
US August payrolls fall 216,000, jobless rate 9.7 pct
Copper steady but economic doubts remain
September 4, 2009
Volatile copper prices rose on Friday, while zinc and lead dipped from multi-month highs, as the economic outlook remained uncertain after US jobs data.
U.S. employers cut a fewer-than-expected 216 000 jobs in August, while the unemployment rate rose to a 26-year high, the government said on Friday in a report showing a still fragile labour market.
Copper for three-months delivery on the London Metal Exchange closed at $6 280 (R47 629) a tonne versus a close of $6 255 on Thursday. Prices of the red metal used in power and construction are down about 3 percent this week, snapping seven weeks of gains.
"Unless the data comes out (and) really surprises to the upside, it's going to be treated with a degree of disappointment," said Alex Heath, head of base metals at RBC Capital Markets.
"People are buying copper because of its perceived future build-up of consumption," he added. "But the longer we go forward and see data that comes out -- the reality is things have maybe bottomed ... but the rate of recovery is still slow."
Commodities have also been shadowing equities for much of this year, looking to company performance to signal a better demand outlook for raw materials.
But while copper drifted in and out of positive territory after the US data, European shares rose.
Copper prices have more than doubled since January, mainly due to record imports from China, the world's biggest copper consumer, strong speculative interest and macro-economic data signalling a global recovery from recession.
"We are very bullish on copper in the next three or four months," said Max Layton, an analyst at Macquarie Bank. "The global macro data is going to continue to improve ... there is 15 percent upside from here perhaps at least."
He added that threats of labour strikes were also a factor.
Analysts have also warned of base metal price corrections this quarter, due to weak fundamentals and the possibility of tighter monetary policies in China.
LEAD, ZINC SURGE
Zinc, which has been trailing other metals recently, soared to a 13-1/2 month peak on the back of surging lead price and fears China might close down zinc smelters next. "The Chinese government is aiming to close down older, more polluting production of all metals, people are beginning to wonder whether we'll start to see zinc smelter closures," said Gayle Berry, an analyst at Barclays Capital.
Zinc is produced alongside lead, so if a company is forced to close its lead operations, profitability might be hit and zinc output might have to be closed also.
Zinc closed at $1,922 a tonne from $1,893, having earlier hit $1,989.75, its highest since mid-July last year.
Sister-metal lead, produced as a by-product of zinc, ended at $2,304 from $2,280, having earlier touched $2,387, its highest since early May last year.
Lead is on course for a gain of more than 30 percent over the last two weeks, with supply fears dominating after the Chinese authorities, spooked by recent lead poisoning incidents, shut down polluting smelters.
But news that shut-down lead smelters in China might reopen next month capped gains.
For a column on lead pollution from Andy Home click on: Aluminium was last bid at $1,850 a tonne against $1,852 amid news some Japanese buyers have agreed to pay a premium of $115 per tonne for primary aluminium ingots to be supplied in October-December, up more than 50 percent from the third quarter.
Among other industrial metals, tin was last bid at $14,250 from $14,450 while nickel closed at $17,650 from $18,200.
Weighing on nickel was the record LME inventory levels at 116,640 tonnes, worries over stainless steel demand and market talk of a resolution to strike action at Vale Inco's Canadian operations. - Reuters
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