Copper bounced after hitting fresh 6-1/2-year lows on Thursday following a rebound in the oil price gave pause to investors' worries about the state of the global economy. Declining oil prices also reduce costs for mining companies, allowing them to continue to produce at lower metals prices, potentially creating further surpluses.
Brent crude slid to a new 12-year low on Thursday as the prospect of more oil supplies from Iran loomed, but rebounded after some players covered short positions.
"Global economic growth appears to be weakening. The slump in the oil price is in effect telling us that global growth is extremely weak while trade activity on a global basis we know is struggling," said Robin Bhar, head of metals research at Societe Generale in London. "I struggle to see any bullish catalysts in the near term ... but there's slightly calmer sentiment now only because the Chinese currency isn't falling as sharply and the (Chinese) stock market although volatile has calmed down as well."
Chinese stocks ended as much as 2 percent firmer while China's yuan currency slipped again on Thursday. Three-month copper on the London Metal Exchange slumped to a low of $4,329.50 a tonne, the weakest since May 2009, before erasing losses and closing at $4,415.50, up 0.6 percent.
Copper has dropped nearly 7 percent this month after sliding by about a quarter last year. Also tempering the downside was flaring out of nearby LME copper spreads on Wednesday to the highest in a year, signalling a lack of immediate on-hand supply. "Maybe this is a little positive sign that this year might be better than its start," Triland said in a note.
LME data also showed that one party was the dominant holder of the LME's inventories and cash positions in copper, holding over 50 percent, which traders said could be linked to the tight availability.
Aluminium gained after six large Chinese aluminium producers earlier this week were considering forming a joint venture to stockpile the metal. Three-month aluminium ended up 1.3 percent at $1,482.50 a tonne. Tin also probed the downside, sliding as far as $13,095 a tonne, the lowest since July 2009, before recovering and finishing unchanged at $13,350.
Zinc is the only industrial metal that has a positive outlook this year, analyst Jessica Fung at BMO Capital Markets said in a note. "Relative to other base metals, even a flat demand environment could see a deficit market this year," she said, adding that mine supply is forecast to fall 4 percent this year. Zinc climbed 1.1 percent to $1,511 a tonne, lead added 0.1 percent to $1,629, while nickel, untraded in closing rings, was bid 2.2 percent higher at $8,570.
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