Copper fell 4.6 percent and aluminium slumped to a 5-1/2 year low on Wednesday as news that world's biggest miner BHP Billiton was cutting jobs due to the global recession hit market sentiment. BHP, which until now had set itself apart from other miners by maintaining output, said it would close its giant Ravensthorpe nickel mine in Australia, writing off $1.6 billion, as it battles a collapse in commodity prices.
A further rise in copper and aluminium stocks also weighed on prices. Copper slipped to a low of $3,190 a tonne as inventories in London Metal Exchange warehouses hit their highest level since January 2004 after jumping 8,375 tonnes to 417,475 tonnes.
The metal closed at $3,215 in LME rings, compared with its close of $3,342 on Tuesday. Three-month aluminium on the LME fell as low as $1,330 a tonne, the lowest price since April 2003. It closed at $1,335 a tonne versus $1,400.
"Aluminium fundamentals are extremely weak," analyst Michael Widmer at BNP Paribas said. "Producers have moved towards cutting output yesterday...but there is so much surplus metal around in the world that is making its way into the warehouses."
Aluminium inventories in LME warehouses jumped 88,975 tonnes, the largest one-day surge since December 18, to above 2.64 million tonnes, within sight of the record high in June 1994. Alcan, a unit of Rio Tinto and the world's second-biggest aluminium producer, plans to cut another six percent of output and shed 1,100 employees, the firm said on Tuesday.
Falling base metal prices due to a slump in demand have forced miners to scale-back production and downsize. BHP's decision was the latest in a series of production cuts announced by the major mining companies but it failed to support nickel prices.
Nickel fell 6 percent to $10,905 a tonne versus $11,550. Anglo American said on Tuesday it had temporarily halted production at its biggest nickel mine in Venezuela. Lead fell 8.5 percent to a low of $1,066 but closed at $1,087 from $1,165 a tonne. Zinc was down 8 percent at $1,150 from $1,250, and tin at $11,600 from $11,300.
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