Copper sustained its biggest weekly loss in nine weeks on Friday as slack physical demand from China, nervousness in front of a long-awaited bailout deal for Greece and bearish technical signals weighed on the market. After rallying more than 15 per cent this year to its highest levels in five months -- near $8,800 per tonne in London last week and $4 per lb in New York -- copper has been unwinding, falling nearly 7 per cent through key lines of technical support which has left prices vulnerable to further downside pressure in the week ahead, analysts said. "Copper's been struggling all week ... it's been on the precipice of breaking down a little bit, technically," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey. "Copper can build up momentum very quickly ... a break of $3.60 (per lb) would be very bad. I would not be comfortable being long here from a technical perspective, fundamentals aside." London Metal Exchange (LME) benchmark copper fell $125, or 1.5 per cent, to close at $8,175 a tonne. For the week, copper lost over 3.5 per cent of its value. In New York, the key March COMEX contract dropped 8.30 cents, or 2.2 per cent, to settle at $3.7080 per lb, near the bottom of its $3.6935 to $3.8320 session range. While broader market optimism toward a final Greek debt deal -- now expected on Monday -- helped boost world stocks to a 6-1/2 month peak and bolstered the euro versus the dollar, copper failed to tag along. Copper prices remained depressed most of the day as near-term demand prospects, particularly from China, dimmed. "Hopes of financial assistance for Greece are driving the market; the market is quite optimistic today but the recovery is fragile and we should be prepared to see lower prices," said Commerzbank analyst Daniel Briesemann. "If you take a look at China you can see a continuous build-up in inventory levels which shows that demand is cooling down a little bit in China." Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 9.6 per cent to 217,142 tonnes this week, the highest since mid-2002, weekly data released by the exchange showed on Friday. "The Chinese have definitely backed away here. They will be back and stockpiling metal, but for the moment, they are letting the market back away," LOGIC Advisors' O'Neill said. "China not buying now is more of a trading strategy." CHINA DEMAND Copper sentiment has taken a hit in recent days from softer demand signals from China, whose near 40-per cent intake of the world's copper demand can easily power or dismantle any market rally. "The passing of the early China New Year break has revealed thin markets for copper and no great benefactors in the form of the Chinese consumer," Credit Suisse said in a research note. "Although one market participant we spoke to had described the current physical market conditions as horrible, most observers agree that consumers are generally holding back in expectation of better bargains ahead on prices." Falling copper inventories in LME-monitored warehouses, however, were pointing to stronger demand, especially in the United States. Stocks fell by 4,750 tonnes to a fresh 2-1/2 year low of 306,375 tonnes, latest data showed. Aluminum edged up $4 to close at $2,164 a tonne. A recent surge in Chinese imports of primary aluminum could hit a wall in April as weak domestic prices drive traders to cut new orders for spot metal, trading sources said on Friday. Tin plunged $530 to end at $23,475 a tonne. China has raised a resource tax on iron, tin, molybdenum, magnesium, talc, and boron in a move aimed at conserving resources and curbing pollution, an official newspaper said.
