"I think it is fair to say we are in a manufacturing recession globally, which is not really surprising if you look at the car market ... something that is holding back metals demand," said analyst Carsten Menke at Julius Baer in Zurich. "It's all about demand at the moment, because if you look at the supply side for copper, we have some severe issues there,
and aluminium supply is falling globally, which hasn't happened in about 10 years." Copper is consumed widely in the power and construction sectors and often used to gauge global economic health. China, whose economy has been hurt by the prolonged trade war with the United States, accounts for around half of global copper demand. The world's biggest copper miner, Codelco, has agreed its 2020 physical copper premium to European buyers at $98 a tonne, the same level as for 2019, copper industry sources said on Friday.
LME lead gained 1.5% to close at $2,160 a tonne, the highest since March. Nickel prices climbed 0.9% to end at $17,790 a tonne, marking their first weekly gain in three, as headline inventories in LME-approved warehouses dropped to 133,128 tonnes, their lowest since November 2012. "The latest inventory reduction - stocks have been slashed by 20% since mid-September - is being attributed to Indonesia's announcement that it will be re-introducing a nickel ore export ban from next year," Commerzbank said in a note.
"Traders and consumers appear to be securing supply before this happens." The discount of cash LME aluminium to the three-month contract has fallen to $13.75 a tonne, the lowest since May, indicating less availability of near-term supply in the LME system. Chile's Antofagasta, a major copper miner, negotiated on Thursday with workers hoping to stave off a strike at its small Antucoya deposit in Chile, though union leaders said there had been little progress in discussions.
LME aluminium edged up 0.1% to $1,719 a tonne in closing rings, zinc added 0.2% to $2,300, and tin finished unchanged at $16,475. Volumes were moderate as China is closed for a long holiday until Oct. 7.