March 6, 2015 / 10:44 AM / 3 years ago

METALS-Copper heads for small weekly loss as strong dollar drags

* SocGen sees copper floor at $4,500 on oil, currency drop

* China nickel premiums jump as country shuts old NPI plants

* Lead enquiries pick up in Asia from secondary producers

* Coming Up: U.S. Nonfarm payrolls Feb at 1330 GMT (Adds official midday prices)

By Maytaal Angel

LONDON, March 6 (Reuters) - Copper headed for a weekly loss on Friday as the dollar rallied ahead of the monthly U.S. jobs report and signs of lacklustre demand in top consumer China.

The dollar hit an 11-year high against major currencies on Friday as investors bet the U.S. jobs report would raise chances of interest rate hikes.

A strong dollar makes dollar-priced metals costly for non-U.S. investors.

In China, equities fell as investors digested comments by top officials that highlighted growth and debt challenges the country faces this year.

China must implement an expansionary fiscal policy this year to help prevent a sharp slowdown in the economy, Finance Minister Lou Jiwei said.

On Thursday, Premier Li Keqiang called annual economic growth of about 7 percent the “new normal”.

Three-month copper on the London Metal Exchange was last bid down 0.5 percent in official midday rings to $5,804 a tonne. Copper was facing a weekly loss of around 1.5 percent, its biggest decline in six weeks.

“We’re still in a lull post Chinese New Year. I expect a bit of a pick-up but ... any price above $6,200-6,300 per tonne, copper will not stay there for very long,” said Deutsche Bank analyst Grant Sporre.

“We’re (still) in a surplus for this year and next ... even though mining companies have downgraded guidance and we’ve had 170,000 tonnes worth of disruptions so far this year,” he said.

Daily LME data showed copper inventories rose by 4,675 tonnes to 323,050 tonnes, their highest level since January 2014. MCU-STOCKS

Analyst Mark Keenan of Societe Generale said downside risk prevails in the medium term given a significant fall in the cost of production that could lower the floor price for copper.

“For copper, the widely understood floor of $5,500 a tonne is actually $1,000 cheaper if you factor in the currencies and the oil price fall,” he said.

Bonded nickel premiums jumped by $20 after a city in eastern China closed several factories, including many nickel pig iron producers, as the government steps up enforcement of a new environmental law. NI-BMPBW-SHMET

LME nickel traded down bid down 0.4 percent at $14,130 a tonne in rings, while tin was last bid down 0.2 percent at $18,100 a tonne.

LME lead was last bid down 0.7 percent to $1,807, eroding gains of around 2.5 percent on Thursday, though the metal still looked set to notch its biggest weekly gain since Jan 2014 at almost 4 percent.

“Recently there are some lead enquiries in Asia,” said a source at a lead smelter, as scrap dealers buy low 99.97 purity LME lead instead of scrap batteries which have become more expensive.

LME zinc traded down 0.3 percent at $2,014 a tonne, having hit its lowest since mid-January earlier, while aluminium traded down 0.3 percent at $1,797 a tonne.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

$1 = 6.2645 Chinese yuan renminbi Additional reporting by Melanie Burton

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