Copper has hit a six-year low and zinc has touched its weakest in two years as gloomy sentiment about global growth and oversupply continued to weigh on international markets overnight.
They closed only slightly weaker, however, after the US dollar turned lower and some speculators covered bearish positions ahead of the weekend.
Three-month copper on the London Metal Exchange slid to $US5,121 a tonne, the weakest since July 2009, before recovering to close down 0.2 per cent at $US5,173. Copper has given up 1.2 per cent this week.
LME zinc dropped to $US1,846 a tonne, the lowest since August 2013, before paring losses to finish at $US1,863, down 0.2 per cent.
The US dollar index fell after earlier jumping to the highest level in over three months on improving US payrolls data which bolstered the case for a US rate rise in September.
A weaker US dollar supports commodity prices in the US currency by making them cheaper for buyers using other currencies.
While the main focus of investors has been the health of the economy in top metals consumer China, weak economic data released on Friday about European powerhouse Germany also added to the pressure on prices.
German exports fell by more than expected in June and industrial output also declined in Europe’s largest economy.
Rises in copper inventories on the London Metal Exchange and Shanghai Exchange on Friday highlighted concern about an expected surplus on global markets.
Further weakness in the currencies of countries where metals are produced has also been a factor depressing markets, lowering costs for miners and allowing them to accept weaker prices.
“Definitely, the weakness from producer currencies, from South Africa to Australia, in part may explain the price movement,” said Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt.
Weinberg said upcoming Chinese trade data may also support the market, showing Chinese metals demand is not as dire as some believe.
“The negative sentiment has been weighing on prices for weeks and months but the recent stabilisation of the equity markets in China should help sentiment to improve,” Weinberg added.
China’s CSI300 index ended the week up 2.4 per cent, its biggest weekly gain since July 10.
Aluminium ended 0.2 per cent lower at $US1,589 a tonne even after Century Aluminium curtailed capacity at one of its four smelters.
Lead jumped 1.4 per cent to close at $US1,729 a tonne, tin shed 1.2 per cent to $US15,300 and nickel fell 0.5 per cent to $US10,800.
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