DM: Copper slips as dollar firms, fundamentals still solid
By Zandi Shabalala
LONDON, Jan 9 (Reuters) - Copper slipped on Monday as the dollar continued to strengthen in the wake of solid U.S. payroll figures but falling stocks and promising data from top consumer China stemmed losses.
In thin trade, three-month copper on the London Metal Exchange, fell 0.3 percent to $5,575 a tonne by 1138 GMT as the dollar rose 0.2 percent.
A U.S. non-farm payrolls report on Friday showed slower hiring in December but an increase in wages, supporting the case for more U.S. interest rate rises and putting pressure on commodities priced in dollars.
However, copper inventories fell on Monday, offering some support to the metal used in power and construction. Stocks fell to 294,900 tonnes, down 225 tonnes from the previous session and 14.6 percent lower from their December high.
ING's head of commodities strategy Hamza Khan said the strong fundamentals for copper could see prices rise slightly this week, although they would still be range-bound.
"The inventory levels have been falling pretty sharply over the last few sessions. We also saw more encouraging (economic) data from China last week," he said.
Last Thursday, copper prices hit their highest in more than two weeks at $5,698 a tonne.
Broker Jefferies lifted its copper price forecast for the end of 2017 by more than 15 percent to $2.75 per pound, from $2.38 per pound, as it now sees a supply deficit for this year due to less spending by miners.
Disruptions could come as soon as this week with a ban on ore exports from Indonesia set to come into effect, although miner Freeport is in talks with the government to continue exports as it constructs a new smelter.
Hedge funds and money managers reduced their net long positions in copper, U.S. Commodity Futures Trading Commission (CFTC) data showed.
China copper premiums have come under pressure after large inflows into warehouses as traders delivered metal to tidy books at year-end.
Elsewhere, zinc rose 0.7 percent to $2,637.50 per tonne. The metal used to galvanise steel jumped 60 percent in 2016 as supply dwindled.
Barclays said in a note it expects tightness in the zinc market to "remain supportive as concentrate shortages could lead to smelter outages outside China".
In other metals, aluminium was down 0.2 percent at $1,689.50 a tonne, not far off a two-month low hit last week. Lead steadied up 0.1 percent at $2,016, and nickel rose 1.6 percent to $10,175 a tonne.
