* LME copper stocks fall, but still near five-month highs
* Bernanke comments steady dollar
* BHP looking to clinch early wage deal in Chile (Adds NEW YORK to dateline, recasts, updates with New York closing copper prices, adds analyst comments)
By Chris Kelly and Michael Taylor
NEW YORK/LONDON, Oct 9 (Reuters) - Copper ended lower on Friday, backing away from the previous session’s three-week highs on doubts that there is enough demand to support further gains given prices have nearly doubled this year.
Copper for December delivery HGZ9 on the New York Mercantile Exchange’s COMEX division shed 6.05 cents, or 2.1 percent, to close at $2.8380 a lb, pulling back from Thursday’s $2.9010 session, its loftiest level since Sept. 18.
On the London Metal Exchange (LME), copper for three-month delivery MCU3 was last bid at $6,230 a tonne from $6,330 at the close on Thursday.
“Sentiment its a bit mixed at the time being, the demand picture is in view of improving in the next six months but perhaps not too significantly,” said Michael Khosrowpou, analyst at Triland Metals.
“January to now, (copper) prices have become immensely stronger and people are wondering if the strength is justified.”
Despite a trickle of improving macro economic data, doubts over demand remain with LME copper stocks falling 250 tonnes to 346,600 tonnes but remaining near five-month highs. [LME/STX1]
Base metals prices also shifted lower in response to a firmer dollar following comments on monetary policy from Federal Reserve Chairman Ben Bernanke. [USD/] [ID:nN08545619]
In remarks delivered late Thursday, Bernanke said that while the Federal Reserve must continue to prop up the economy for an extended period, it cannot do so indefinitely for fear of an inflationary surge. [ID:nN08537898].
“The dollar’s bouncing a little bit today, but fundamentally and technically nothing really changes,” said Zachary Oxman, managing director with TrendMax Futures in Encinitas, California. “There is still a strong downtrend in the dollar and a strong uptrend in the metals.”
“To me, it’s a great opportunity to add to positions,” he said.
Additional weight stemmed from a forecast from the International Copper Study Group calling for a surplus in the refined copper market of about 370,000 tonnes in 2009, as weak demand eclipses a decline in production. [ID:nL9141095]
Investors are also keeping tabs on developments in Chile, where workers at the world’s biggest copper mine, Escondida, are likely to accept an early wage deal offered by owner BHP Billiton (BHP.AX) BLT.L and avert a strike. [ID:nN0971505]
But strike risks remain at other top mines including Spence, Bingham Canyon, Andina and Chuquicamata.
“Given the risks on the supply side over the next two months, we expect that there could be considerable price strength for copper,” said Deutsche Bank in a note.
“Into 2010, however, we believe that market attention could once again focus on demand, which we expect will be very unimpressive. We believe that prices will likely weaken into mid-2010 as a consequence.”
In other metals, aluminum MAL3 ended flat at $1,909 a tonne. LME inventories in the metal, used in transport and packaging, dipped 7,950 tonnes but remained in touching distance of record levels above 4.6 million tonnes.
Steel-making ingredient nickel MNI3 ended at $18,750 from $19,495 while battery material lead MPB3 finished at $2,249 versus $2,285.
Zinc MZN3 ended at $2,033 a tonne from $2,080 and tin MSN3 finished at $14,800 from $14,945.
Investors in tin, used in electrical solder, remain concerned about supplies because of a dominant position controlling more than 90 percent of cash warrants on LME stocks. [ID:nL1509642]
On investors’ radar is LME week, the annual flagship event for the industry, due to start on Monday. [ID:nL8107826]
Metal Prices at 1834 GMT Metal Last Change Pct Move End 2008 Ytd Pct
move COMEX Cu 283.10 -5.60 -1.94 139.50 102.94 LME Alum 1903.25 -5.75 -0.30 1535.00 23.99 LME Cu 6230.50 -99.50 -1.57 3060.00 103.61 LME Lead 2240.00 -45.00 -1.97 999.00 124.22 LME Nickel 18825.00 -670.00 -3.44 11700.00 60.90 LME Tin 14700.00 25.00 +0.17 10700.00 37.38 LME Zinc 2042.00 -38.00 -1.83 1208.00 69.04 SHFE Alu 14845.00 10.00 +0.07 11540.00 28.64 SHFE Cu* 48830.00 640.00 +1.33 23840.00 104.82 SHFE Zin 15730.00 400.00 +2.61 10120.00 55.43 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Maytaal Angel; editing by Sue Thomas and Jim Marshall)