UPDATE 1-Shanghai aluminium down by limit, copper slips

Aluminium futures in Shanghai fell by their 4 percent daily limit on Friday, to a 14-year low, after a hefty stockpile jump in London, while Shanghai copper slid almost 2 percent.

The benchmark Shanghai aluminium contract fell to 12,635 yuan ($1,848) a tonne, the lowest level since 1994, before recovering to 12,675 yuan by the midday break, while London three-month aluminium dropped 1 percent to $1,775.

Analysts forecast further price falls in the base metals as they do not expect an immediate positive impact on the real economy from a series of stimulus plans around the world.

"I don't think the bailout plans, including China's 108 basis point rate cut on Wednesday, will stimulate consumption quickly," said analyst Judy Zhu at Standard Chartered.

"For instance, in China, it will still take time for companies to work through heavy inventories," she said.

The lack of market demand was also evident in a 44,325-tonne jump in LME aluminium inventories, which are now close to 1.8 million tonnes, almost twice the level they started the year and their highest since December 1994.

Traders said stocks could hit 2 million tonnes by the end of the year, especially since China may reduce or cancel taxes on exports of primary aluminium and refined lead, as part of its move to boost exports.

Industry sources said Beijing was considering removing a 10 percent tax on exports of refined lead and reducing taxes on exports of unwrought primary and alloyed aluminium to 5 percent from 15 percent.

"Consumption is weak everywhere and aluminium prices will be under heavy pressure," said analyst Wang Zheng at Everbright Futures.

Copper prices in Shanghai slid 1.9 percent on Friday, reversing a 2 percent gain in the previous session.

The benchmark Shanghai copper futures contract fell by 530 yuan, to 27,820 yuan, while London Metal Exchange copper for three month delivery fell 0.6 percent to $3,675.

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