Copper fell more than 3 percent on Friday, weighed by rising inventories, slowing Chinese imports and broad-based losses across commodity markets linked to a rebounding dollar. Copper for three-months delivery on the London Metal Exchange ended at $6,175 a tonne, down 3.3 percent from a close of $6,385 on Thursday.
The dollar rose against most major currencies on Friday, coming off a one-year low against the euro as waning risk appetite cut demand for higher-yielding currencies and other assets. "Oil is slightly off, the US dollar is a bit stronger and I think that is showing up across all commodities. Plus the last two months of Chinese (copper) imports have declined," said VM Group analyst Carl Firman.
Copper imports to China fell 20 percent in August from July, data showed last week, while metals production boomed as smelters raced to take advantage of rising prices to fill the void left by falling imports. "We are worried that Chinese imports will continue to pull back in September. We've seen clear evidence of overstocking within China and production levels are high across the board," said Dan Smith, an analyst at Standard Chartered.
Latest LME data also showed copper stocks rose another 3,325 tonnes to total 327,700, up more than 25 percent from early July. Stocks in Shanghai rose 7 percent week-on week to 104,428, topping last week's two-year high. "After Labour Day people were looking to LME inventories for signs the US is starting to pick up in demand, and Europe and Japan. That hasn't happened yet, people are saying 'I can buy this restocking story but show me the evidence'," said Peter Hickson, European mining analyst at UBS.
Latest LME data showed copper stocks rose another 3,325 tonnes to total 327,700, up more than 25 percent from early July. Stocks in Shanghai rose 7 percent week-on week to 104,428, topping last week's two-year high. Copper has more than doubled this year, driven by macro-economic data signalling recovery, speculative inflows and record imports by China, the world's largest copper consumer.
Among other industrial metals, aluminium eased to $1,917 a tonne from $1,967, after rallying to a four-week top of $1,978 on Thursday. LME data showed aluminium stocks fell 6,400 tonnes but remained near a record 4.6 million tonnes. Premiums in Asia and parts of Europe have, however, been rising on speculation Russia's RUSAL will sell Glencore another 500,000 tonnes of the metal.
Lead traded at $2,193 a tonne against $2,276, having slid more than 5 percent to $2,162 and compared with a one-week high of $2,350 hit in the previous session. Hickson said concerns about Chinese smelter shutdowns were propping up lead, but every now and again the market fell on the view the smelter shutdowns would not happen. Tin ended bid at $14,675 down from $14,800.
Firman said a crackdown on illegal mining in the main tin-producing islands in Indonesia may provide some support for the metal although the impact was offset by rising Chinese production and weak demand. "Tin is still in limbo," he said. Zinc ended at $1,912, down from $1,958.50 and nickel at $17,150 from $17,575.