Copper touched new 3-year lows before recovering on bargain hunting on Friday, but another rise in warehouse stocks and concerns over future demand for industrial metals capped any major advances. "Until there is a turnaround in the physical demand picture it seems unlikely that these rallies will be sustained for any significant period of time," Leon Westgate, an analyst at Standard Bank, said.
Copper for three-months delivery on the London Metal Exchange fell to $3,375 per tonne, its lowest since July 2005, before closing at $3,540 from Thursday's close of $3,480. The metal fell around 3 percent on Thursday. Aluminium also hit three-year lows, and despite an intraday rally ended the day little changed. "From a fundamental perspective things still look very ugly for at least the next couple of quarters," analyst Gayle Berry at Barclays Capital said.
Copper prices in London have dropped almost 6 percent so far this week on worries about demand, following weak housing data, problems in the auto sector, dismal jobs data and a slump in US equities to their lowest in a decade. Inventories of copper, used widely in power and construction, are currently at 283,125 tonnes, having risen around 20 percent so far in November.
Stockpiles in Shanghai Futures Exchange warehouses fell 3,797 tonnes, or 18 percent, to 17,699 tonnes, more than expected, but not enough to offset rising stocks and a growing surplus in the international market. The International Copper Study Group (ICSG) reported the world refined copper market saw a surplus of 74,000 tonnes between January and August, versus a surplus of 22,000 tonnes in the year-ago period.
The picture is grimmer for aluminium. Inventories rose 2,025 tonnes to more than 1.72 million - the highest since December 1994, pushing the three-month price to $1,745 per tonne, its weakest since July 2005. The metal, used in transport, power and packaging, closed at $1,748 per tonne from $1,785 on Thursday. Aluminium prices could find a price floor at around $1,600, said Widmer, when looking at the production cost for miners.
Battery material lead closed at $1,183 a tonne against $1,185/1,185.5 late on Thursday. Tin, which fell 7.6 percent in the previous session, closed at $11,500 tonne from $11,905 on Thursday. Nickel traded at $10,000 from $10,300 on Thursday. Zinc was unchanged at $1,180.