Industrial metals edged lower on Wednesday, with aluminium touching a 4-1/2 year low as concerns over weakening demand, rising inventories and a firmer dollar dragged on sentiment.

Copper for three-month delivery on the London Metal Exchange (LME) shed as much as 4.8 percent to hit a low of $3,384 a tonne versus $3,555 on Tuesday.

The metal, used as an indicator of economic activity, was at $3,460 in the official rings.

Aluminium traded at $1,647, after hitting a low of $1,633 - its lowest level since June 2004 - from $1,700.

Negative macroeconomic news paint an ever-gloomier demand picture for base metals and aluminium has been hit hard.

Sentiment was not helped when data showed the US monthly auto sales plunged nearly 37 percent to the lowest level since 1982, forcing automakers to slash production.

The German auto industry also took a battering - this year it is headed for the worst domestic car sales since the country's reunification in 1990.

The impact of a slowing global economy on demand for metals was further highlighted by the level of stocks of aluminium in LME warehouses.

Stocks have risen 12,750 tonnes to 1.83 million tonnes, its highest level since November 1994.

'All the macro data looks pretty poor and that is manifesting itself in daily stock builds in most of the key commodities on the LME,' Simon Toyne, an analyst at Numis Securities.

'As the macro data declines, people's views on the length of this downturn evolves ... They think it will now be longer.'

'Demand appears to be getting worse rather than better,' Toyne said.
Adding more gloom, consumption of primary aluminium in China, the world's top consumer, may rise 8.5 percent this year and just 3 percent next year due to the global financial crisis, a senior analyst at Antaike, a state-owned research group, said.

Lead slumps

Prices of battery material lead fell 7.4 percent to a 2-1/2 year low of $1,005. It traded at $1,020 in the official rings versus $1,085 on Tuesday.

Worries over excess supply were exacerbated by news that the West Australian state government would allow Toronto-listed Ivernia Inc to export 8,000 tonnes of lead concentrate stockpiled at the port of Esperance.

Exports of lead were suspended in early 2007 over health concerns, leading to the closure of the company's Magellan lead mine in Australia.

'Lead is down on the back of the Ivernia news,' said one LME trader. 'Poor across the board today, but Ivernia is just giving lead a bit more of a dig.'

Tin was down 2.3 percent at $11,725 against $12,000 on Monday, and nickel was at $9,380 from $9,500.

Zinc lost $39 to $1,130 - its fall aided by a rise in LME stocks of 9,326 tonnes to 202,750 tonnes, its highest level since July 2006.

Investors began to shift focus to interest rate decisions from the Bank of England and the European Central Bank.

'There is a lot of momentum on the downside,' said John Meyer, an analyst at Fairfax. 'I see metals coming off until policymakers announce further stimulus packages to stimulate consumer as well as financial activity.'

'It's really a massive lack of confidence within the global economy.'-Reuters