Nickel was also off sharply, falling to the $12 level but bouncing off of it several times to close at $12.0508/lb., down 28½ cents. Zinc plunged, just coming off its intraday low to end at $0.9637/lb., down 2 2/3 cents. Aluminum had a day of big ups and downs to little effect as it added less than a quarter of a cent, to $1.2843/lb., while lead continued to crater, falling below $1 at one point before crawling back barely above it at $1.0013/lb., down 4¾ cents.

The bears remained firmly in control of the industrial metals, as concerns about declining demand take hold with a vengeance.

Zinc now sits at a 6-month low, but lead in particular is a battered and fallen angel. It had soared on supply worries to $1.75/lb. last October. Yesterday, it plunged below the $1 mark for the first time since May of 2007, on advancing inventories in the midst of seasonally low demand for batteries.

After the poor technical close Thursday, there was continued technical selling on Friday, said one LME trader. Sentiment has turned negative with inventory rises recently for many of the metals, he explained. Copper inventories monitored by the LME were up by a massive 11,150 metric tons yesterday, to 121,275 tons.

The China factor is big. “The path of least resistance in LME copper in the next month or so is lower,” said JP Morgan analyst Michael Jansen. He expects to be able to buy copper around $7,800/ton-$8,000/ton (vs. $8,195 yesterday) before it makes its next move up towards $8,800/ton-$9,000/ton.

“This is because Chinese buyers right now are relatively well supplied,” Jansen said, noting an increase in Shanghai Futures Exchange inventory levels this past week.

Ron Goodis, a futures-trading director at Equidex Brokerage Group, is very cautious going forward. “Things have been much more volatile than usual,” Goodis said. “Prices have stretched to such extremes, it’s beyond reasonable limits. You have to be long at your own peril.”

A potential supply side development, though, is a strike at Namibia’s largest zinc mine, scheduled to have started last midnight. The Skorpion Zinc mine annually produces 150,000 tons of special high grade zinc for the Asian, European and North American markets.

And though we don’t normally cover rare earth minerals, the mining situation with regard to them is critical, with dire implications for the U.S. if nothing changes. For a chilling report on the situation, click here.

Nickel blasted back over $13.10 in the late morning, but then fell sharply to close at $12.8374/lb., down almost 5 cents. Zinc was up and down with little change, ending at $1.0024/lb., down less than a quarter of a cent. Aluminum sagged to $1.307/lb., down 1 2/3 cents, while lead was marginally higher at $1.2228/lb., up two-tenths of a cent.

The Fed’s action had little effect on the industrial metals, with copper rising slightly on what analysts tabbed as primarily short covering.

Volume was light, as most of the trading came before the Fed weighed in.

Also factoring in was the slight rise in GDP, as expected, with speculators hoping that that signals a rise in future demand.

The strike against state-owned Codelco in Chile continued, but even down there, “All eyes are on the Fed,” said Bart Melek, global commodity strategist with BMO Capital Markets.

Melek went on to say that strike participants were mostly “keeping their powder dry” ahead of the interest rate announcement.

Supply data came in slightly bearish yesterday. Inventories monitored by the LME rose 875 metric tons, to 110,525 tons.

Had the Fed’s rhetoric indicated a more hawkish stance on inflation is coming down the road, “we wouldn’t be surprised to see a bit of a correction here in copper,” said Michael Gross, of OptionSellers.com. Gross added that over the next month the metal could pull back to the $3 to $3.25 range.

But with no clear signal given, prices are likely to “continue to move sideways” within a $3.85 to just over $4 range, said Eric Wittenauer, analyst with Wachovia Securities.

In company news, Grupo Mexico said on Monday that its plans to ramp up output at its giant Cananea copper pit have been delayed indefinitely after a labor board declared a 9-month-long strike there legal.

Grupo Mexico hoped to have significant production by May but plans were stifled by new worker blockades this month. “At this point, we are unable to provide a revised copper production guidance for the remainder of the year and the date at which we will resume operations is not currently foreseeable,” said CFO Daniel Muniz.