LONDON - Copper prices were on track for a third consecutive weekly loss on Friday as Chinese demand remains weak and investors await inflation data next Tuesday that could hint at the direction of U.S. monetary policy.
Copper hit a seven-month high of $9 550.50 a tonne in January as speculators bet that China's economy would revive and US interest rates would stop rising, removing a brake on economic growth and allowing the dollar to weaken.
But strong US employment data last week triggered fears of higher rates and boosted the dollar, which rose further on Friday.
Chinese metals inventory numbers and factory gate price data on Friday underlined continued weakness in the country, where stock markets and the yuan fell, despite a rise in new Chinese bank loans in January.
Benchmark LME copper on the London Metal Exchange (LME) lost 0.6% to $8 930.50/t by 11:50 GMT and was also down 0.6% over the week.
Prices of the metal used in electrical wiring are still up nearly 20% from the start of November.
"The market jumped the gun," said Saxo Bank analyst Ole Hansen.
Chinese demand may not revive until the second quarter, raising the risk of a short-term price decline, he said, adding that he was bullish in the longer term.
The Lunar New Year is typically a period of weak demand in China and copper inventories in Shanghai exchange warehouses tend to rise sharply, peaking around March.
This year's increase to 242 009 t from 54 569 t in late December is already the biggest since 2020.
However, copper stocks in LME warehouses, at 63 100 t, are at their lowest since 2005, providing little buffer if demand rises.
In other metals, LME aluminium fell 1.1% to $2 472/t, zinc CMZN3 was down 0.9% at $3 095.50, nickel tumbled by 4.2% to $27 910, lead slipped 1.4% to $2 096 and tin was down 0.7% at $27 550.