LONDON: Copper prices fell on Friday, ending two days of gains, as rising stocks in London Metal Exchange warehouses and signs of softer demand from major consumer China pulled the metal further from last month's 17-month peak.
A calmer tone to the wider financial markets, after a surprisingly hawkish statement on interest rate policy from the US Federal Reserve sent the dollar to 14-year highs on Thursday, did little to support the metal.
Benchmark LME copper was down 1 percent at $5,675.50 a tonne at 1030 GMT. The metal, used widely in power and construction, has now fallen more than 5 percent since breaking above $6,000 last month.
"That positioning- and technically-driven rally to the upside had reached a point which was too far detached from underlying fundamentals to remain supported," Standard Chartered analyst Nicholas Snowdon said.
"There has been a turn in investor sentiment, and more broadly, when you look at the state of the physical market, the refined market is softer than one would usually expect at this time of year. We're seeing that ultimately reflected in some pretty sizeable deliveries into LME warehouses in Asia."
Copper inventories in LME warehouses rose another 11,775 tonnes on Thursday, exchange data showed on Friday, to reach a six-week high of 307,075 tonnes. Stocks have risen by 40 percent from their Dec. 8 low.
Elsewhere, LME aluminium was 0.4 percent lower at $1,729.50 a tonne, while zinc was down 1.7 percent at $2,767 a tonne and lead was 3 percent lower at $2,279 a tonne.
"Chinese lead production decreased by a good 7 percent to 362,000 tons in November. probably due among other things to the low treatment charges," Commerzbank said in a note.
"According to the International Lead and Zinc Study Group (ILZSG), the global lead market was still amply supplied in the first 10 months of the year, the figures indicating a supply surplus of 35,000 tons. While production was scaled back by roughly 1 percent, demand declined by twice as much." Three-month LME nickel was down 0.4 percent at $11,275 a tonne.
News that the Philippines government had cancelled permits for another three mines on environmental grounds did little to support the metal, after data on Thursday showed the global nickel market moved to a surplus of 900 tonnes in October from a deficit of 500 tonnes a month before.
Tin was 0.6 percent lower at $21,105 a tonne.
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