Copper prices slipped on Wednesday as stocks rose and the market fretted about rising supplies, while aluminium rose on expectations China would become a net importer in the second half of the year. Battery material lead fell to its lowest in nearly a year on the London Metal Exchange, while nickel slid to levels seen last August.
Copper for three-month delivery closed at $8,240 a tonne from $8,320 a tonne at the close on Tuesday. The metal used extensively in power and construction hit a record high of $8,880 a tonne in April as the market fretted about miners' strikes in Chile and Peru.
"Copper was supported by strikes ... Stocks are rising, there is less tension about supplies," said Eugen Weinberg, commodities analyst at Commerzbank. Stocks of copper in LME warehouses of around 125,000 tonnes have risen by more than 10 percent since early May.
"There is legitimate concern about more supply coming into the market over the months ahead," MF Global said in a note. Analysts said the market was also worried about demand from the United States, where the housing market is in recession, and from China which has ample stocks.
More available material is reflected in premium for cash material over the three-month contracts - the backwardation - down nearly $100 a tonne from almost $160 at the start of May. Energy-intensive aluminium ended at $3,020 from $2,997 on Tuesday. The metal used in power, transport and packaging has been boosted by concern about supplies from China, the world's biggest consumer and producer.
The earthquake in China's Sichuan province last week has helped support prices, but the region produces only between 500,000-700,000 tonnes of aluminium a year, a fraction of the total capacity at about 12.5 million tonnes.
More pertinent is the rising cost of electricity, which accounts for about one-third of production costs estimated at an average around $2,400 a tonne, and the chances of some Chinese smelters closing down. "Costs in China are rising big time, coal prices have picked up again. China will become a net importer in the second half of the year ... Prices will go up," Weinberg said.
He said tin prices were also supported by production shortfalls in Indonesia, the world's second biggest producer. Tin hit a record high $25,500 a tonne on May 9, a gain of nearly 60 percent since the start of the year. It closed at $24,300 from Tuesday's last quote at $23,655/23,700.
Nickel fell to a session low $25,140 a tonne and closed at $25,300 from $26,000. Used for making stainless steel, nickel has come selling pressure on news that many mine projects delayed or postponed over the last couple of years would soon be producing.
Lead slipped to $2,129 a tonne, a loss of more than 40 percent since the metal hit a record high last November. It ended at $2,147 from $2,170/2,175 on Tuesday. Prices have fallen because of rising stocks, which at around 65,000 tonnes, are up more than 40 percent since February. Zinc closed at $2,205 a tonne from $2,275 on Tuesday.
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