SINGAPORE -- London copper fell 1.8 per cent, paring the previous session's 3.3 per cent gain, and Shanghai futures also dropped, tracking the international market and on concerns of slowing Chinese demand.
China's annual consumer price inflation saw its seventh consecutive monthly drop to a 22-month low of 2.4 percent in November from 4.0 per cent in October, as economic growth slows.
"The signs of economic slowing in China are becoming more visible," said Barclays Capital analyst Yingxi Yu.
"We don't think a rally in metals can be sustained in the near term and even though we are seeing a rapid response from producers, it's hard to see prices recover on a sustained basis for the next three to six months."
London Metal Exchange copper declined 1.8 per cent to $US3,245 by 1435 AEDT, down $US60 from Wednesday, while Shanghai futures fell one per cent or 250 yuan to 25,050 yuan at the midday break.
"If I had to go into Christmas long or short from here, I'd be short. I see no signs that these markets are bottoming out. I don't think the recession has really started yet and prices will stay low for a while," a senior dealer in Sydney said.
"The answer to when prices are going to go up again will depend on when we see stocks start to fall as a result of production cuts and a recovery in demand."
LME copper stocks jumped 1,025 tonnes overnight to 303,600 tonne, up more than 50 per cent in the year to date.
China's imports of unwrought copper and semi-finished products fell 6.1 per cent on the month to 217,214 tonnes in November and year-to-date imports are down 8 percent from the same period in 2007, at 2.35 million tonnes. [
"We couldn't really expect better numbers than this given that the world is teetering on the brink of depression," Jonathan Barratt, managing director of Commodity Broking Services. "Looking forward, I think we could see some support in the New Year. The buying won't be as strong as we have seen in past years, but people will start to set up for the northern hemisphere spring and the construction season," he said.
News of more production cuts had little effect on prices.
Rio Tinto , which announced on Wednesday plans to cut its workforce by 13 per cent, slash capital expenditure and put more assets up for sale to repay debt, said it will cut aluminium output in France.
FNX Mining said it will suspend its remaining nickel ore production and lay off 307 employees at operations in Canada.
Shanghai aluminium rose 0.6 per cent to 10,790 yuan a tonne, while LME metal was unchanged at $1,525.
LME nickel fell $US100 to $10,200 after Wednesday's 9.6 surge.
