London - Copper fell on Friday and was on track for its biggest weekly decline since 2011 on concerns about global growth after
surprisingly weak economic data as well as rising inventories and mine supply.
While London Metal Exchange copper came off the 1-1/2 year lows hit on Thursday, it was still seen vulnerable to further falls. Other commodities though, including gold and oil, and world equities edged up after the big sell-off this week.
“People are increasingly realising that copper supply has heavily surprised on the upside,” Danske Bank analyst Christin Tuxen said.
“That is increasingly weighing on copper, alongside the heavy build-up in exchange inventories.”
Benchmark three-month copper, untraded in rings, was bid at $7,009 from $7,088 at the close on Thursday. It hit a 1-1/2 year low of $6,800 during
the last session, and is on track for its biggest weekly fall since late 2011.
New mine supply of copper is seen bringing the market into a surplus of 120,000 tonnes in 2013, compared with earlier forecasts of a 12,000 tonne deficit, with the surplus forecast to widen to 295,568 tonnes in 2014, a Reuters survey of analysts showed in January.
Copper production at Anglo American rose 1 percent to 170,400 tonnes in the first three months of the year, beating expectations of a drop in the metal given operational problems, as the ramp up of its Los Bronces mine offset lower production at Collahuasi in Chile, the company said on Friday.
Meanwhile, inventories of copper in LME warehouses are hovering around a 10-year high.
Reflecting souring sentiment towards commodities, investors in US-based funds pulled a record $2.7 billion out of commodities and precious metals funds in the latest week, data from Thomson Reuters Lipper service showed on Thursday.
Also, the average actively managed fund in the Lipper Global Commodity sector fell 1.83 percent in the first quarter, as market volatility provided no clear direction.
In further signs of a moderation in economic growth, the number of Americans filing new claims for unemployment benefits rose last week and factory activity in the nation's Mid-Atlantic region cooled in April.
The poor data came on top of the International Monetary Fund's decision to trim its global growth forecast.
“Trading desks report opportunistic buying of physical consumers at current levels,” said Credit Suisse in a research note. “Given challenging technical momentum and wobbly economic data, we think it is questionable whether this near-term recovery can continue much further.”
In other metals, three-month aluminium was $1,900 per tonne in rings from $1,913 at the close on Thursday, lead was $2,023 from $2,014, nickel was $15,305 from $15,530 and zinc was $1,894.5 from $1,888.5.
Tin, untraded in rings, was bid at $20,990 from $20,590. - Reuters