LONDON, Oct 26 (Reuters) – Copper fell 1.5 percent on Friday as global stocks headed for their worst week in more than five years, overshadowing worries over the sharp shortage of supply building in the market. Available London Metal Exchange copper inventories fell to their lowest in nearly 13 years while cash copper traded at its highest premium to the three month future in nearly three years. Still, investors are spooked about Sino-U.S. trade frictions, a mixed bag of U.S. corporate earnings, Federal Reserve rate increases and an Italian budget dispute. Aluminium hit its lowest in more than a year while nickel slumped to its weakest since late December.
“When you’ve had an equity market selloff like we’ve had in the past few weeks, metals are not going to benefit,” said Colin Hamilton, head of commodities research at BMO Capital Markets.
“There should be a relief rally in base for the year end as Chinese economic data improves … because of stimulus … but a lot depends on financial market conditions stabilising.”
* COPPER PRICE: Three-month copper on the London Metal Exchange traded down 1.6 percent in official midday rings at $6,125 a tonne, heading for a fourth weekly drop in five.
* SUPPLY: Miner and commodities trader Glencore on Friday reported a 12 percent rise in copper production so far this year. Other major miners reporting this month – BHP Billiton and Rio Tinto – have signalled lower copper output.
* OPEN INTEREST: Market open interest on Shanghai copper fell to 495.476 lots on Thursday, the lowest since Feb. 9, 2017, in a sign that money is leaving the market.
* OTHER METALS: LME nickel fell more than 2 percent to its weakest since late December and was last bid down 2.3 percent in rings at $11,875, while aluminium fell nearly 1 percent to its weakest since last August and was last bid down 0.9 percent in rings at $1,977.
“Aluminium production appears to be being cut back in China due to the current weak margins. Lower production, which should result in lower Chinese exports, is likely to shore up aluminium prices. The LME (price) has nonetheless dipped below $2,000 per tonne,” Commerzbank analysts said in a note.