Copper prices were set for a weekly loss as rising stockpiles and dire economic data around the world hammered home fears that demand will remain weak despite a rebound in Chinese factory activity.
China, meanwhile, threatened retaliation after the United States moved to block shipments of semiconductors to Huawei, reviving tensions between the two countries that have spooked investors.
US President Donald Trump said he could even cut ties with China.
Benchmark copper on the London Metal Exchange (LME) was down 0.3 per cent at $US5,185 a tonne at 1613 GMT and more than 1.5 per cent lower this week — its biggest weekly loss since late March.
“Rallies are difficult to sustain because the facts are grim,” said Robin Bhar, an independent consultant. “The worst is behind us, but we’re not back to normal.”
Copper fell around 30 per cent from mid-January to mid-March, hitting a four-year low of $US4,371 as the coronavirus spread across the globe, shutting industry.
Prices have recovered somewhat as China, the biggest consumer, has reopened, but other parts of the world remain in lockdown.
China’s industrial production climbed 3.9 per cent in April from a year earlier – the first rise this year and faster than the 1.5 per cent increase forecast in a Reuters poll.
China’s output of 10 nonferrous metals – including copper, aluminium, lead, zinc and nickel – rose to 4.93 million tonnes in April, up 3.8 per cent year-on-year.
Chinese Yangshan copper import premiums have risen to an 18-month high of $US110 a tonne from $US55 in February, suggesting rising appetite for foreign metal.
The euro zone economy saw its deepest contraction on record in the first three months of the year.
An already-dismal near-term US economic outlook has darkened further in the latest Reuters poll of economists. Retail sales plummeted in April.
Trump said this week he was open to negotiations on another possible stimulus bill. China also acknowledged the need for more fiscal stimulus for its economy.
Copper stocks in LME-registered warehouses rose 30 per cent this week to 278,750 tonnes, the highest since October.
Inventories in Shanghai Futures Exchange (ShFE) stores increased 2.3 per cent to 208,890 tonnes, but are down from a peak of just over 380,000 tonnes in March.
ShFE lead stocks climbed 12 per cent to 7,211 tonnes, the first rise in nearly three months, while aluminium inventories fell 9.4 per cent to a three-month low of 352,342 tonnes.
Aurubis, Europe’s largest copper producer, said production at all its sites was at a good level in the most recent quarter.
LME aluminium was down 0.9 per cent at $US1,462 a tonne, zinc was 0.2 per cent higher at $US1,961, nickel fell 1.8 per cent to $US11,855, lead lost 1.2 per cent to $US1,600 and tin was down 0.9 per cent at $US14,900.
All were heading for weekly losses.