Aluminium prices dropped to 1-month lows on Friday as stocks soared and traders priced in growing expectations of an oversupplied market this year. Copper for three-month delivery on the London Metal Exchange also fell, touching a low of $8,065 a tonne on a 13 percent rise in Shanghai stocks in the week ending Thursday heightening concerns over weakening demand.
Aluminium fell at one point to $3,020 a tonne, the lowest price since June 17, before closing at $3,034 compared with $3,127 on Thursday. The latest sell-off was triggered by news of rising stocks in LME warehouses, which rose 4,325 tonnes to more than 1.1 million tonnes, the highest since May 2004.
"There's no real shortage of aluminium as we've seen from the large stock builds this week," said Lehman Brothers analyst Michael Widmer. China's power output grew 8.3 percent in June from a year earlier, the lowest normalised rate in over 6 years as the country grapples with a deepening supply crisis caused by a shortage of coal.
Analysts estimate power accounts for up to 45 percent of aluminium smelting costs. The metal used extensively in the transport, packaging and power industries has fallen by about 9 percent since hitting a record high of $3,380 a tonne on July 10.
Copper closed at $8,080 a tonne, down from $8,160 on Thursday. The metal used in construction and power has fallen nearly 10 percent since hitting a record high of $8,940 a tonne on July 2. Copper for September delivery was trading down 5.20 cents at $3.6630 a lb on the New York Mercantile Exchange's COMEX division.
Zinc, used for galvanising steel, closed at $1,820 a tonne, down from Thursday's last quote at $1,839/1,840. That compares with a 2-1/2-year low of $1,750 seen earlier this month.
Traders said news that China's refined zinc and zinc concentrate output hit a record high in June had undermined prices on Friday. Stainless steel material nickel eased to close at $20,400 a tonne from $20,775, lead closed unchanged on the day at $1,965, while tin bucked the trend to last trade up slightly at $23,400/23,450 a tonne from $23,225.
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