Copper's fall came despite some stability in other markets such as crude oil, equities, and the dollar.
It was its sharpest weekly decline in nearly three years for the economically sensitive red metal. The selling followed Thursday's vicious upheaval in world financial markets caused by escalating debt problems in Europe, a gloomy economic outlook for the United States and signs of slowing in China stirred.
Losses deepened despite copper's fundamental picture turning increasingly supportive this week, with unsatisfied workers at Freeport-McMoRan Copper & Gold's Grasberg mine threatening a longer strike and an optimistic long-term view from Chilean copper giant Codelco.
The pessimistic economic mood wreaked havoc across the base metals complex, knocking aluminium down to its lowest price since Nov. 2010, tin to its lowest since July 2010, nickel to a Dec. 2009 low, and zinc and lead to 14- and 13-month lows, respectively.
But losses were trimmed as the euro regained ground against the dollar later in the day.
London Metal Exchange (LME) benchmark copper plunged $314 to finish at $7,360 a tonne, recovering a bit from an earlier-session low at $7,115.75, which marked its lowest since Aug. 2010. For the week, the losses amounted to 18 percent -- the biggest weekly drop since the post-Lehman Brother collapse in October 2008.
In New York, the key December COMEX contract tumbled 20.85 cents or 6 percent to settle at $3.28 per lb, its lowest on a closing basis for the fourth-position contract since Aug. 25, 2010.
Day two of the sell-off brought with it an increase in trading volume, with a little more than 87,000 lots traded late in New York, about 70 percent above the 30-day norm, according to Thomson Reuters preliminary data.
The market losses also stirred some spot market business for copper cathodes in the US, where premiums fell further to a 4- to 4.5-cent range this week.
With fundamentals taking a backseat to weaker macro developments, analysts saw opportunity in the metal's downturn.
"We still believe there is going to be sufficient demand for copper at lower prices. We will likely see bargain-hunting come in at certain technical levels," said David Meger, vice president and director of metals trading with Vision Financial Markets in Chicago.
"Given the fact that we have seen a 25 percent decline or more off the highs, not surprising to see some buying come in on these large dips, particularly at technical levels, to somewhat support the market."
"I think it's overdone, but as I say there is extreme risk aversion ... Yet open interest is down which suggests longs closures rather than new short positions. Support is now at $7,000 per tonne," said Andrey Kryuchenkov, an analyst at VTB Capital.
SUPPLY CUTS
Helping metals off their lows, the euro rose against the dollar, rebounding from an eight-month low hit the previous day. A weaker US currency makes dollar-priced commodities cheaper for holders of other currencies.
"Aluminum, zinc, nickel and tin are all trading below their marginal cost of production so if prices stay at current levels, I would think we start to see a supply side response to what has already been projected as a tight market going into year end and early next year," RBC said in a research note.
Copyright Reuters, 2011