Base metals held on to the previous levels in a lower band of consolidation in spite of the upbeat government data showing a smallerthan- expected payroll drop in April.

Copper, Zinc and Aluminum ended the session marginally lower on MCX. The slight drop in prices could be attributed to build up in inventories in this complex.

Imports of refined copper to China, the world's top consumer of the metal, rose to a record high in March, as the inventories on the LME dropped by some 30,000 tonnes. On Friday, inventories dropped another 4,900 tonnes to 389,000, the lowest level since mid-January, while canceled warrants were slightly lower at 72,925 tonnes from Thursday's 74,875 tonnes.

PT International Nickel Indonesia has asked the government for more time to assess plans for a new plant, with a capacity of
20,000-30,000 tonnes, after a study showed the $1.8 billion project may not be feasible, the company's chief said on Friday. Inco wants to postpone the project for another two years.

Copper demand in South Korea, Asia’s thirdbiggest metals buyer, may improve gradually later this year and in 2010 buoyed by economic stimulus measures and a shortage of scrap material. Global economic spending plans may help boost prices of the metal later this year.

The strike at Xstrata Plc’s Lomas Bayas copper deposit , with a capacity to produce 75,000 metric tons of copper a year, in Chile extended into a fifth day as the union working the mine pressed for higher wages. A meeting may be called today between government officials, the union and management to resolve the conflict.

With sharp upside in prices, idle capacities might restart and the upside in metals might get capped in short term. Copper is vulnerable for further correction, but we are not still bearish on zinc.

Copper too technically looks vulnerable as the chart shows it has formed an pattern where upside is capped at Rs. 239.50 and breaching the triangular formation it may even test Rs. 230 on the downside.

Zinc closed slightly below the trend line so we may see some selling pressure and prices may test Rs. 75.1/kg during the day.