Copper falls 9 percent

Copper pulled most of the industrial metals deep into negative territory on Friday, losing almost 9 percent as concerns over global demand triggered a sell-off across commodities. "The outlook for demand doesn't look good," said Triland Metals trader Michael Khosrowpour.
"China seems to be one of the saviours around but at the same time there are a lot of other economies that are shrinking." Copper for three month delivery on the London Metal Exchange closed at $4,099, after earlier falling to $3,832 from $4,210 at the close on Thursday. The metal, a key gauge of economic activity, has dropped more than a third this month, making it in line to post its biggest monthly decline since at least 1970.
"I am bearish into next week," said Khosrowpour. "The data that we are going to be seeing and the outlook on a macro scale doesn't provide much incentive yet to say that we are going to be seeing any higher levels in industrial metals."
Inventories of the copper, used in power and construction, in LME warehouses jumped 6,775 tonnes to 230,060, the highest level since March 2004.
Prices have slumped almost 55 percent since reaching a record high of $8,940 a tonne in July. "We are going to see prices remaining under pressure for the time being," said Dan Smith, a metals analyst at Standard Chartered. "This tone is going to be with us for a while because people are waiting to get some clarity on the underlying picture. Certainly demand is getting softer."
In industry news, Chile's Codelco, the world's largest copper producer, said its copper output fell 8.2 percent in the first nine months of the year, citing a strike by subcontract workers and falling ore grades. Aluminium hit a low of $1,997 a tonne, but tracked back to $2,045 from $2,065. Adding to the gloom, LME aluminium stocks jumped 1,150 tonnes to 1.5 million tonnes - a reminder of the metal's weakened state of demand.
"We are not out of the woods in terms of metals prices and economic recovery," said Fairfax analysts in a note. "Chinese demand remains a marked unknown and could make the difference between small and larger LME stock levels." Nickel closed $200 higher at $12,100, but earlier had fallen more than 8 percent to an intraday low of $10,990.
Norilsk Nickel, the world's largest nickel miner, said it would cut 10 percent of the workforce at its central office in Moscow due to the financial crisis, but the move would not affect production. A number of miners, including Norilsk, have said they would revise investment programmes for 2009, partly as a result of falling metal prices.
Chelyabinsk Zinc Plant, Russia's largest zinc producer, said on Friday it has abandoned plans to develop a mine near its main production asset and will slash investments after plummeting metal prices led to a first-half loss. Zinc fell as low as $1,100 a tonne before ending at $1,125 from $1,160. Lead was down at $1,505 from $1,520, while tin dropped to $13,400 a tonne from Thursday's last bid of $14,600.
Producers in the last few months have started to cut output across metals as falling prices squeeze profit margins. But Macquarie Bank analysts said in a note: "Although output cuts and project delays have been significant in recent months, the shorter term bearish demand outlook means that base metals need to remain at or below current price levels for a sustained period until we see sufficient production cuts as to tighten up the metals markets by say, the end of 2010.