London Metal Exchange (LME) benchmark copper contract was whipsawed by funds on Thursday, as it initially took a beating that chopped over $100 off prices, before abruptly reversing direction and partially recouping the sharp losses.
All the metals, with the exception of nickel, have come under increasing downside pressure over the past 24 hours as copper led the way and, at its low point of the day, was down some 10 percent on Tuesday's highs.
Traders attributed the losses to renewed liquidation by funds sucking money out of the complex back to the dollar as the US currency rallied on Federal Reserve Chairman Alan Greenspan's comments on inflation on Wednesday.
They added that price moves had been exaggerated by dwindling volumes ahead of a public holiday in the United States on Friday to observe a national day of mourning for the late President Ronald Reagan.
Some analysts were still not convinced that base metals had bid their final farewell to higher levels.
"I am not yet convinced that it's all over. I think we've probably seen the highs of the cycle, but for metals such as copper and nickel, I still think the fundamentals are strong enough to see prices rallying," said Angus MacMillan, metals strategist with Prudential Bache.
Copper peaked at a near nine-year high of $3,055 as tonne in early March, while nickel stuck 15-year highs at $17,720 at the start of the year. MacMillan did not rule out copper getting back up towards $3,000 later in the year.
Three months copper ended the evening kerb at $2,565 a tonne, down from $2,602 at the Wednesday kerb close but well off its earlier dive to $2,488.50 - its lowest in just under one month.
Martin Fewings, analyst with Mitsui Bussan, echoed MacMillan's forecast for further price strength in the final quarter of the year, especially given strong fundamentals for most metals.
"I think between now and the summer and a good part of Q3, it will be fairly dull, but I think we'll see a stronger fourth quarter...I would argue that the downside is fairly limited, although in the short term so is the upside," he said.
"The outlook is fairly cloudy at the moment and people want a clearer idea of how inflation is developing in the United States so they can decide where to put their money."
Warehouse stocks have dropped sharply this year and continue to fall, while consumers have been drawing down their inventories.
"That can't go on for ever," MacMillan said, referring specifically to nickel. "Just looking at the supply/demand balance, there are forecasts for a fairly substantial deficit both this year and next, maybe not as much as we thought at the start of this year but still significant enough to suggest an upside break."
Nickel finished $350 higher at $12,400 a tonne - nearly $700 off its earlier lows.
Falconbridge said it expected second quarter production of refined nickel at its Sudbury, Ontario complex to be lower that the first quarter's output. Aaron Regent, Falconbrige's chief executive, said the decline stemmed from the effects of a three-week strike at Sudbury during the first quarter.
Aluminium was shaken less by copper's initial weak performance and ended the session down just $3 at $1,640.
Tin was undermined by sell-stops under $9,000, easing as low as $8,600, before finishing down $325 at $8,900.
Lead fell to $780 from $810 and zinc to $1,060 from $1,074.
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