Copper fell for a fifth straight day on Friday, posting its biggest weekly loss since mid-March, as mounting inflationary pressure in China cast a shadow over the near-term demand outlook. Copper again shunned rallies in the precious metals complex, with gold and silver surging to record and 31-year highs, respectively, as investors bought both metals as a hedge against global inflation worries and rising oil prices.
London Metal Exchange (LME) copper for three-months delivery eased $5 to close at $9,405 a tonne. COMEX May copper shed 2.65 cents to settle at $4.2575 per lb. Chinese consumer price inflation sped to 5.4 percent in the year to March, the fastest since July 2008 and topping market forecasts of 5.2 percent. Gross domestic product in China, the world's top copper buyer, eased a touch.
"The market is gradually getting a little bit more worried about what Chinese growth is going to look like over the medium term because of the ongoing tightening," Jesper Dannesboe, senior commodity strategist at Societe Generale, said. Chinese production data added to the negative tone, showing the country's production of refined copper and primary aluminium rose 23.7 percent and 7.4 percent from a year earlier in March, hitting monthly records for both metals on expanded capacity and sufficient supply of raw materials.
Looking at supply, the International Copper Study Group trimmed its 2011 global copper market deficit forecast to 377,000 tonnes, about 20,000 tonnes narrower than its previous forecast in October 2010. Copper inventories at LME warehouses fell 375 tonnes to 450,425 tonnes, a small respite in an overall uptrend that has seen stocks of the metal climb by a fifth so far this year.