Prices of industrial metals nosedived on Friday, with copper in particular plunging more than 5%, as investors worried that slowing demand would push supplies into a glut.
Traders said the broad sell-off was due to a lack of Chinese buyers -- the key market makers for base metals -- and speculators who had provided much of the momentum for last year's record prices.
"There's no evidence of fresh buying from speculative quarters, and all the indications are that the Chinese are going to wait until after the (Lunar) New Year holidays before coming to the market," a dealer said.
Chinese markets will be closed Feb. 19-23 for the Lunar New Year celebrations.
Dealers also said investment funds that used to add metals to their portfolios in the first few days of each month have been cutting back too. "Some of the funds may in fact be selling today," one trader said.
Copper, a red metal used in electrical conduction, telecom cabling, jewelry-making, coin-minting, plumbing and auto manufacturing, hit a one year-low in UK trade and a 10-month bottom in U.S. business.
Copper for March delivery fell 14.55 cents, or nearly 5.75%, to $2.3850 a pound on the New York Mercantile Exchange's COMEX metals division. It hit an overnhit an overnight peak of $2.5465, before sliding to $2.3910, its lowest level since March 30.
On the London Metal Exchange, copper for three-months' delivery fell $345, or 6.1%, its lowest level since the week of April 2, 2006, Reuters charts showed.
Analysts blamed the weakness mainly on creeping stockpiles of copper in LME warehouses. LME copper stocks have risen 127% over the last year.
Except for nickel and tin, inventories for other base metals such as zinc and aluminum were also high, industry sources said.
LME zinc futures fell 6.3% on Friday and LME aluminum slid 2.8%.
"The market seems in no hurry to restock and, as such, prices may well hold these equilibrium levels until either trade buying returns or investors get interested again," said William Adams, metals analyst with BaseMetals.com.
In other commodity markets, energy futures gave up early gains and gold prices fell.
Commodity indexes weighted on energy were down after tracking the drop in oil and gas.
The Reuters/Jefferies CRB Index, which includes crude oil and 18 other futures, fell 0.61% to 297.39.
The Goldman Sachs Commodity Index slid 0.34% to 5,438.30.