Copper dips to US$3.303/lb

Copper closed at US$3.303/lb cash on the London Metal Exchange on Friday, down from the previous day's US$3.316/lb as US non-farm payroll data surprised to the upside with the addition of 175,000 jobs in May. Forecasts were estimating 167,000 to 172,000 jobs to be created. In April, 165,000 jobs were added. The unemployment rate in May was 7.6%. The jobs data is closely watched as it is tied to the Federal Reserve's bond buying program. Fed chief Ben Bernanke has said the program will not end until unemployment is at 6.5%. Friday's close is 0.58% higher than May 31. Global inventories rose 0.2% to 862,247t in the same period, enough for 15.4 days of consumption, according to Chile's copper commission Cochilco. China will announce its trade balance for May on Saturday, with the surplus seen rising to US$20.8bn from US$18.2bn in April, according to Kathleen Retourne of FastMarkets. China has a public holiday next week with markets closed from Monday-Wednesday. In the short term, Barclays Capital sees potential for prices to overshoot due to recent supply disruptions, tightness in scrap, seasonal improvements in Chinese demand and short positioning. "However, we view moves above US$7,500/t [US$3.47/lb] as opportunities to short copper on a likely slowing in Chinese consumption over the summer alongside further supply increases through H2," Barclays analysts said in a note. The copper market is expected to enter a surplus on improved supply in the second half of 2013. DISRUPTIONS The closure of Freeport McMoRan's (NYSE: FCX) Grasberg copper-gold mine in Indonesia following a fatal accident on May 14 has been supporting copper prices. The shutdown - in order to investigate the incident - was reported to potentially last up to three months, which could mean 120,000t of lost copper production, according to Barclays. However, the Indonesian economy minister said that the investigation will proceed as quickly as possible and the mine could start operating much sooner. "Even if the closure does last three months, the current level of mine disruption allowance used up is still only 59% of the total, so to the extent that cutting production estimates at Grasberg matters, it is not yet affecting our supply growth forecast," Barclays analysts wrote in a note. "Furthermore, we believe that there is probably about one month of inventory held by the mine, which could help to further offset the net production loss. So the potential lost production could range from 40,000-120,000t." At the same time, Chile's copper production fell 1.2% in April year-on-year and 9% month-on-month after output grew 7% year-on-year in Q1.