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. London Metal Exchange copper came off 1-1/2 year lows hit on Thursday, but was still seen vulnerable to further falls despite other commodities including gold and oil, and world equities, edging up after a big sell-off this week.
The dollar fell to a session low versus the euro meanwhile, but even this move failed to help copper. A weak dollar makes dollar-priced metals cheaper for European and other non-US investors. "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 was down more than 2 percent at $6,909.50 a tonne 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 for 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, although Shanghai Futures Exchange copper inventories have fallen to their lowest since early March.
"The Chinese really don't like copper at the moment (but) the physical market is showing signs of life, with physical premia picking up," Standard Bank said in a note. "The SHFE copper market is quite short, with the potential for a short-covering rally on both the SHFE and LME should the current doom and gloom lift."
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. The average actively managed fund in the Lipper Global Commodity sector fell 1.83 percent in the first quarter. In further signs of a moderation in economic growth, the number of Americans filing new claims for unemployment benefits rose last week while 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. In other metals, three-month aluminium was down at $1,993.25 a tonne from $1,913 at the close on Thursday, lead was down at $1,998.25 a tonne from $2,014, nickel at $15,300 a tonne from $15,530, and zinc at $1,872.50 a tonne from $1,888.50. Tin was down at $20,750 a tonne from $20,590.
