Mar 23, 2012 NEW YORK (Dow Jones)--Copper futures rose Friday as the previous day's slide and a weaker U.S. Dollar drew buyers to the market.
The most actively traded copper contract, for May delivery, rose 4.30 cents, or 1.1%, to settle at $3.8085 a pound on the Comex division of the New York Mercantile Exchange.
During the week, futures fell 1.8%, as weakening manufacturing activity in China and the euro zone rattled the demand outlook for the growth-sensitive metal. Copper is used across industries, including in construction, power and automobiles. Thursday, the benchmark contract settled at the lowest price in more than two weeks.
That slide, and a Friday pullback in the U.S. dollar, drew cautious buyers. The ICE US Dollar Index, which tracks the currency against those of some major US trading partners, Friday touched its lowest levels since March 9. Weakness in the dollar makes dollar-denominated futures appear cheaper for buyers using other currencies.
Still, copper's strong start to the year has been threatened by mounting concern economic growth may be weaker than previously expected. Futures rose to just short of $4 a pound in early February but failed to hold those gains.
"The base metals continue to face significant conflicting near-term demand signals," analysts with Barclays said in a note Friday.
Growth in China, the economic engine that drove copper prices to a record high early last year, has been slowing. A closely watched reading released Thursday showed the country's manufacturing sector contracted last month.
"The short-term picture remains very murky" for copper and other industrial metals, traders with RBC Capital Markets said in a note. "Recent economic data leads us to believe that another dip of some magnitude is likely on the cards."
Many analysts see higher prices for copper later this year, however. With new mines slow to come online after construction stalled during the financial crisis, copper supply is widely expected to fall short of demand in 2012.
"Existing mines have struggled to maintain production and there has been a dearth of new capacity," Stephen Briggs, senior metals strategist BNP Paribas, said of copper and its supply challenged cousin, tin. In a note Friday, Briggs reiterated his forecast for copper to rise to at least $4.08 a pound late this year.
Copper settlements (ranges include electronic and pit trading):
Mar $3.8095; up 4.20 cents; Range $3.7675-$3.8240
May $3.8085; up 4.30 cents; Range $3.7625-$3.8250