* U.S. non-farm payrolls unexpectedly fall in September
* Dollar volatile, euro erases gains after Juncker comments
* Analysts predict action from Fed to boost economy
Industrial metals rallied on Friday, with copper hitting its highest in over two years for a
third straight day as a surprise fall in U.S. jobs strengthened talk of fresh moves to boost
the world's biggest economy.
Benchmark copper CMCU3 jumped to $8,349.50 a tonne, its highest since mid-July 2008
and ended the day at $8,300 a tonne, up 2.5 percent from $8,100 a tonne on Thursday.
"It looks like weak economic data is actually positive for commodities as it boosts
expectations of quantitative easing out of the United States which has been one of
the motivators of the market recently," analyst Daniel Brebner at Deutsche Bank said.
The U.S. economy unexpectedly shed jobs in September for a fourth straight month
as government payrolls fell. Nonfarm payrolls dropped 95,000, against a market
expectation of an unchanged number.
Speculation about the U.S. Federal Reserve stepping in with more quantitative easing
to bring life to the economy has been fuelling metal prices as it bolsters the demand
outlook while hitting the dollar.
"It's definitely a strong possibility that the Fed will do something to assist,
to ease further," analyst David Thurtell at Citi said. "But if you look at world industrial
production, it's now above where it was prior to the crisis -- hence the high copper price."
The U.S. dollar slid to a 15-year low below 82 against the Japanese yen, and fell against
other currencies, making industrial metals cheaper for non-U.S. currency holders.
Copper has risen more than 30 percent since hitting an eight-month low in June, at
the forefront of a rise in metals prices that saw tin hit a record high this week.
TIGHT SUPPLIES
Copper is also benefiting from a tightening market, where stocks in LME warehouses
have tumbled more than 30 percent since the middle of February. Friday's data showed
LME stocks down 1,450 tonnes to 372,000 tonnes, having fallen from seven-year highs
above 555,000 in late February.
Talk of launching physically backed exchange-traded copper products (ETPs) looks to be a
cause of unease as consumers think it could reduce the availability of the metal.
"Over the course of the next quarter if that become a reality the introduction of that
element of demand could push prices higher," Brebner said.
The supply side worries, along with an uncertain demand outlook as well as the sustainability
of high metal prices, will be at the heart of this year's LME Week, the annual gathering of
the metals industry in London, due next week.
Aluminium CMAL3 rallied more than 4 percent to hit $2,422 a tonne, its highest since April 20
and closed at $2,420 a tonne versus Thursday's close of $2,326 a tonne.
"Aluminium is finally catching up with copper," said one LME trader, adding that prices had
failed to match copper's rise in recent days. Among other metals, tin rose to $26,350 a tonne
versus Thursday's close of $25,600, short of Wednesday's record peak at $26,790, underpinned
by tight supply from top exporter Indonesia and low stocks.
Stainless steel material nickel closed at $24,400 a tonne from Thursday's close of $23,900,
while battery material lead rose to $2,270 a tonne versus $2,209. Lead inventories
slipped 900 tonnes but remain near 10-year highs at around 198,400 tonnes.
Zinc gained to $2,289 a tonne versus $2,261 a tonne.
Metal Prices at 1604 GMT
Metal Last Change Pct Move End 2009 Ytd Pct
move
#VALUE!
LME Alum 2420.00 94.00 +4.04 2230.00 8.52
LME Cu 8305.00 205.00 +2.53 7375.00 12.61
LME Lead 2272.00 63.00 +2.85 2432.00 -6.58
LME Nickel 24375.00 475.00 +1.99 18525.00 31.58
LME Tin 26345.00 745.00 +2.91 16950.00 55.43
LME Zinc 2290.00 29.00 +1.28 2560.00 -10.55
SHFE Alu 15975.00 105.00 +0.66 17160.00 -6.91
SHFE Cu* 60610.00 10.00 +0.02 59900.00 1.19
SHFE Zin 17930.00 55.00 +0.31 21195.00 -15.40
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07. Source: Reuters
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