Aluminium prices eased on Wednesday as Alcoa's earnings sent negative vibrations through markets, while copper drifted away from five-month highs as investors banked profits as inventories rose.
By 0941 GMT, aluminium for three month delivery on the London Metal Exchange fell to $1,462 a tonne from $1,475 at the close on Tuesday and compared with a session low at $1,447.50.
The metal used in transport and packaging came under pressure as aluminium producer Alcoa Inc reported a quarterly loss, while General Motors Corp was in intense preparations for bankruptcy, a source said. "Alcoa is probably one factor," said Michael Widmer an analyst at BNP Paribas. "If you are posting a second quarterly loss in a row, it's not too good."
He added that investors were apprehensive ahead of the earnings season.
"Looking at the inventory movements ... you do have ammunition to drive prices lower," Widmer added.
Aluminium, LME inventories climbed by 35,150 tonnes to a record above 3.5 million tonnes.
Copper fell 2.3 percent to a low of $4,277 but was last at $4,338 from $4,379. Used in power and construction, copper hit a five-month high on Monday, on expectations of a demand pick-up.
But stocks of copper at LME warehouses added 2,300 tonnes to 504,200 tonnes.
Recent gains in cancelled warrants for copper at LME warehouses had boosted expectations that Chinese demand could be recovering, sending prices up about 40 percent this year. The material earmarked for delivery jumped to 59,825 tonnes on Tuesday, up from a level of 27,675 tonnes the week before.
Analysts however, said this material was most likely to be heading for China due to stockpiling and because of tightness in the scrap metal market in the world's top copper consumer.
"Alcoa is going down, copper is going down," said Marc Elliott an analyst at investment bank Fairfax. "There has been some re-stocking in China and all the excitement regarding G20 last week now seems to be running out steam."
"In base metals there is a bit of profit-taking -- they've had a good run and it's all coming back again."
Cancelled aluminium warrants were 94,950 tonnes versus 98,200 at the end of last week but compared with 10,575 tonnes on Jan. 12. A lot of cancelled warrants on aluminium stocks were for Asian warehouses.
China is said by analysts to be taking advantage of firmer domestic aluminium prices that have created a strong arbitrage opportunity.
Negative sentiment was aided by Chinese exports in March -- down by double digits from a year earlier.
Steel making ingredient nickel traded at $10,725 from $10,905 while battery material lead was at $1,310 from $1,334.
Analysts however, said lead demand remained robust despite the poor economic backdrop, while LME inventories at 60,400 tonnes remained relatively low.
Zinc dropped to $1,338 a tonne from $1,355 and tin edged down to $10,636 from $10,900.
Base metals were also weighed down by a broadly stronger dollar and a slump in global equity markets.
A firmer U.S. currency makes metals priced in dollars more expensive for holders of other currencies.
Base metals prices at 0945 GMT Metal Last Change Percent Move End 2008 Ytd Percent
