The market sentiment has turned extremely poor with the resumption of operation at Codelco's Andina mine in Chile. The workers of this mine went on a strike on April 16.
El Teniente, the second affected mine, is also running at full capacity. However, Codelco's El Salvador mine, one of the three affected by the walkout and related protests, is still operating at reduced capacity.
Worsening further, Ecuador's government is willing to restart exploration of large-scale copper deposits by late August after suspending such activity last month. The country's energy and mines ministry is drafting a new law to eliminate widespread corruption and regulatory problems in the industry.
Although the additional output is unlikely to add stocks in the LME-registered warehouses abundantly, a change in the market sentiment is now perceived as a major factor to help the price decline.
"We are still bearish on base metals as the real demand has started playing a role now instead of supply issues earlier," said Jayant Manglik, head, commodities, Religare Enterprises. The copper demand from China is expected to fall because of a lack of domestic demand, he added.
Meanwhile, the red metal for delivery in three months declined 2.7 per cent last week, a second weekly fall in succession, after touching a lifetime high at $8,820 on March 6.
Inventories tracked by LME jumped 10 per cent to 121,275 tonnes, the largest gain since August 2005. On Friday itself, the total gain in inventory was recorded at a staggering 11,150 tonnes.
The increase was mainly in South Korea, a location nearest to LME warehouses in China. Stockpiles monitored by the Shanghai Futures Exchange also rose 10 per cent last week.
Though the Chinese customs department is yet to come out with trade statistics, traders are apprehensive that the Chinese demand has slackened in April, the fourth month at a stretch.
The weakening Chinese demand has also helped nickel to trade sideways, with prices falling by another 5 per cent last week. The silvery white metal was last quoted at $26,725 a tonne in the London kerb trade.
Tin, aluminium and zinc, however, remained slightly upbeat over continuing demand from consumers, mainly from the Asian region.
Base metals and scrap ended rangebound in the spot Mumbai market, with copper wire bar quoting at Rs 399 a kg, while copper utensil scrap at Rs 330 a kg, aluminium ingot at Rs 143 a kg, zinc slab at Rs 113 a kg, lead ingot at Rs 127 a kg and nickel cathode at Rs 1,335 a kg.
For the week ended Friday, base metals on the Multi Commodity Exchange, the country's largest commodity trading platform, declined largely following the guidance from the overseas market.
While nickel and lead contracts went down, copper, aluminium and zinc contracts looked up. The zuly contract was up 4.78 per cent at Rs 95.30 a kg and the tin May contract by 7.96 per cent at Rs 1,017 a kg. The nickel May contract receded by 1.56 per cent at Rs 1,139 a kg and the lead May contract by 6.27 per cent at Rs 97.25 a kg.
