Copper eased 4.2 percent on Thursday and aluminium prices hit their lowest since April 2003 as weak economic data from China and the United Stated worsened the gloomy demand outlook. Sluggish copper prices dragged zinc 5.1 percent down at one point and tin fell 3 percent. Inventories in London Metal Exchange warehouses continued to grow with aluminium stocks hitting a record high.
Aluminium producers have been forced to cut output as demand and prices slumped, but more production cuts were expected. "Over 4 million tonnes, or over 10 percent of world capacity, has been cut back and we still have a thumping surplus which is why we have got to have more cutbacks," said Nick Moore, a commodity strategist at RBS Global Banking & Markets.
Three-month aluminium on the LME closed at $1,330 a tonne versus Wednesday's close of $1,335. Earlier it touched the lowest level since April 2003 at $1,325. Prices for the metal have dropped more than 60 percent since reaching a record high of $3,380 a tonne last July. LME stocks jumped 34,250 tonnes to a record above 2.67 million as supplies of the metal outstrip demand.
RBS's Moore expects a 1.5 million tonne surplus for aluminium this year, up from an estimated 1.4 million last year, and sees LME stocks of 3 million tonnes as easily attainable. "This is going to be a whopping surplus this year even with the cutbacks," he said.
Copper fell 4.2 percent to a low of $3,080 a tonne before closing at $3,090, down $125 from Wednesday. LME stocks rose 4,975 tonnes to a fresh five-year high of 422,450 - equivalent to more than a week of global consumption. Falling copper prices dragged zinc 5.1 percent lower to $1,091 a tonne before closing at $1,120, down $30 from Wednesday.
Tin ended at $11,395/11,400 from Wednesday's $11,600. Earlier it fell to a low of $11,250, down 3 percent. Lead closed at $1,074 a tonne from $1,087, while nickel rose $95 to $11,000. BHP Billiton, the world's top miner, may suspend operations at its Yabulu nickel refinery in the first half of 2009, analysts said.