Industrial metals prices softened on Thursday after a weak Chinese manufacturing survey reinforced worries about demand, while aluminium was also pressured by news China will remove export taxes on rods and bars. Three-month copper on the London Metal Exchange sank to $5,864.50 a tonne, its lowest since March 20, from Wednesday's last bid of $5,910. It closed at $5,940 a tonne.
China's factory activity contracted at its fastest pace in a year in April, a private survey showed, suggesting economic conditions are still deteriorating despite increasingly aggressive policy easing by the central bank. "We haven't seen a strong pickup in (copper) demand in China after the New Year holiday, though there are tentative signs," said Caroline Bain, senior commodities economist at Capital Economics.
"(But) the risks to mine supply haven't faded and we don't see a collapse for copper demand in China, so we're cautiously positive." Copper has been consolidating since hitting near six-year lows in January, as unexpected supply disruptions spurred analysts to cut their 2015 surplus forecasts.
But the metal has been unable to capitalise more recently on the supply story as demand disappoints in China. Aluminium ended down 1.6 percent at $1,777.5 a tonne from Wednesday's close at $1,806. Earlier it fell to $1,769 a tonne, its lowest since March 14 after China said it will remove taxes on exports of non-alloyed and alloyed aluminium rods and bars from May 1.
"Excess Chinese aluminium output has therefore become a key determinant of international prices," Natixis said in a note. Tin ended at $15,475 a tonne from $15,555 and nickel at $12,705 a tonne from $12,675. The steel ingredient came under pressure after an industry group cut its nickel surplus forecast this year to about 20,000 tonnes from 120,000 tonnes as Indonesia's export ban on nickel ore further crimps production in China.
"Nickel stocks have been climbing for years, though the pace does seem to have slowed in recent weeks," a trader said. Zinc closed at $2,222.5 from $2,234 and lead at $2,029.5 from $2,048. Both metals have recently hit multi-month highs this year boosted by falling inventories. However, news the International Lead and Zinc Study Group had more than halved its zinc market deficit forecast for this to 151,000 tonnes from an estimate last October are weighing on sentiment.
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