Copper declines

Copper fell on Friday with appetite for risk waning after the release of a set of mixed economic data from the United States, while rising stocks of the metal in China reinforced uncertainty about future demand. Three-month copper on the London Metal Exchange, was untraded at the close, but was last bid at $7,751, down 0.6 percent from Thursday's close and on track for a weekly increase of only 0.2 percent.
The metal used in power and construction is now trading about 2 percent lower in the year to date after it shed more than 4 percent in February. Data showed that US industrial production rose more than expected in February on a rebound in manufacturing, signalling strength in the world's largest economy.
Optimism however was dampened by other US reports showing a tumble in consumer sentiment in early March, the biggest increase in consumer prices in nearly four years last month and slowing manufacturing growth in the New York State. "The numbers were so-and-so. We are seeing inconsistent reading: one step forward, one step back. It's not firing on all cylinders," said Edward Meir, analyst at INTL FCStone.
He said that lack of growth in Europe was also weighing on the outlook for base metals. "And if anything, fundamentals are getting worse: copper stocks are rising, all the estimates now firmly show a surplus for this year, all these mines are reporting year-on-year output increases, which was unheard of a few years ago." The high level of copper stocks was weighing on prices, with inventories in warehouses monitored by the Shanghai Futures Exchange rising 2.9 percent from last Friday, according from data from the exchange. ShFE and LME copper stocks have climbed more than 200,000 tonnes, or more than a quarter of combined total stocks so far this year.
China's state stockpiler bought 300,000 tonnes of aluminium and 45,000 tonnes of zinc in two closed-door tenders on Friday, smelter sources said, although the move is not expected to lift domestic prices of the metals dramatically. China is the world's top consumer and producer of aluminium, whose domestic prices hover at nearly three-year lows, and zinc, whose prices at home stand near their lowest in four months. The sources said, however, that the purchase is not expected to turn around China's oversupplied aluminium market.
Underlining the excess supply, aluminium stocks monitored by the Shanghai Futures Exchange rose 2.1 percent from a week ago, hitting a record 502,622 tonnes, data from the exchange showed. "The Chinese purchases pose risks, as they keep producers artificially alive and the already high supply surpluses remain in place or are actually increased. In the medium term, this could prevent any significant rise in prices," Commerzbank said in a note.
Benchmark aluminium closed at $1,965 a tonne, down from a last bid of $1,979 on Thursday. Stainless steel material nickel fell to $16,900 from a $17,225 Thursday close while zinc ended at $1,954, down from $1,976. Tin finished at $23,850 from a $23,925 close on Thursday and lead ended at $2,222, from $2,248.50.