Aluminium prices further dropped on continued worries about output from China swamping the global market, notching its biggest monthly decline in more than two-and-a-half years.

Three-month aluminium on the London Metal Exchange (LME) failed to trade in closing open outcry activity and was last bid down 2 per cent at $1,740 a tonne after gaining 2.2 per cent on Thursday (May 28).

Aluminium suffered losses of 9.6 per cent in May, the biggest monthly drop since October 2012, as data showed Chinese output rose to 2.59 million tonnes in April.

“I definitely see more downside risks than upside potential for aluminium because of the supply glut,” said Daniel Briesemann, analyst at Commerzbank in Frankfurt.

"Looking at the technical side, I wouldn't be surprised to see the price to drop to $1,700, and it would be very interesting if it crashes through this level."

LME copper ended 1.3 per cent down at $6,015 a tonne after closing a touch firmer in the previous session. Prices chalked up their first monthly loss in four, of nearly 5 per cent.

Copper has been pressured by ample inventories of refined metal, but prospects that Chinese stimulus measures would revive demand has kept a floor under prices.

"We've seen positive trends in the imports for copper and it certainly feels like monetary easing is helping trade financing activities, which should be supportive of copper imports in the shorter term," said Daniel Hynes, analyst at ANZ in Sydney.

Chinese factories struggled to expand in May despite recent interest rate cuts and other policy stimulus, a Reuters poll showed.

LME copper stocks have turned down since mid-May MCUSTX-TOTAL, while ShFE copper stocks have dropped by about 60,000 tonnes since mid-April. But physical copper traders say there is plenty of metal held in off-exchange inventory. Output at top refined producer China was up 12 per cent year to date in April.

LME nickel closed 1.4 per cent lower at $12,635 a tonne, posting a monthly loss of nearly 10 per cent after lacklustre stainless steel demand in China and a new ShFE contract opened the doors to fresh short sellers.

However, premiums for metal held in China's bonded zones climbed $7.50 this week to $150-$260 on prospects that global brands would be accepted by the ShFE for delivery, traders said.

A spokesman for nickel producer Sumitomo Metal Mining said the company was watching how the market develops and considering whether to register its brands with ShFE, but it had not yet taken any action.

Lead ended 2 per cent weaker at $1,950 a tonne while sister metal zinc shed 1.8 per cent to finish at $2,188. - Reuters