Copper sank to its lowest level this year as investors worried about the outlook for the global economy after the United States gained the smallest number of jobs in a year, adding to pessimistic data out of China and Europe. Declines were kept in check, however, by a rebound in the euro from a 23-month low against the dollar as traders sold out of the dollar following the weak US jobs report.
Three-month copper on the London Metal Exchange ended at $7,361 a tonne, down from $7,425 at the close on Thursday. Copper has fallen for five weeks running, and this week entered negative territory for the year. The metal earlier hit its lowest since December 20 at $7,301 a tonne and is now down around 3 percent for the year. Other metals also slid, with nickel at 2.5-year lows and lead tumbling to levels last seen in October.
US job growth braked sharply in May, and the unemployment rate rose for the first time since July, putting pressure on the Federal Reserve to ease monetary policy further to shore up the sputtering recovery. "We are seeing such widespread disappointing data across the world at the moment, (it's) not really surprising that you are seeing metals markets retreat quite rapidly towards marginal cost of production, especially copper which is furthest above marginal cost of production," said Ross Strachan, an economist at Capital Economics.
China's slowdown worsened in May as its factories saw a further deterioration in demand at home and abroad. In Europe, the euro zone manufacturing index reached its lowest level since June 1009, and British manufacturing activity shrank at its fastest pace in three years. "The official Chinese PMI (purchasing managers' index) number was the only one not showing any weakness until now, and the market appears to be pricing in the reality that these economic troubles are not going to disappear," analyst Eugen Weinberg of Commerzbank said.
Oil futures fell to 16-month lows below $98 a barrel, and equity indexes dropped. London markets will be closed on Monday and Tuesday for the Queen's diamond Jubilee. Nickel, the worst LME performer, is ripe to bounce back in June after a slide has forced nickel pig iron (NPI) producers out of business and a seasonal supply kink has helped shore up the physical market, RBC Capital said in a research note. LME nickel ended at $16,100 from $16,230 on Thursday's close, having hit its lowest level since December 2009 earlier in the session.
Russian metals giant Norilsk Nickel suspended shipments from its Arctic port of Dudinka in May as flooding prompted a seasonal halt. "The closure disrupts the supply of concentrate to Norilsk's refineries on the Kola Peninsula. The port won't open for another month and shipments into Rotterdam have already slowed," RBC noted.
Benchmark prices for NPI, a substitute for nickel used in low grades of stainless steel, have also hit their lowest levels since 2009, while a 20 percent tax on Indonesian ore exports could further crimp supply, it said. Tin ended at $19,395 from $19,600, while battery material lead closed at $1,900 from $1,921, and aluminium ended at $1,972.50 from $1,995. Zinc, used in galvanising, was untraded at the close, but bid at $1,890 from $1,871 on Thursday's close. It earlier fell to the lowest level since early January at $1,856.25.