Copper prices extended their fall on Wednesday, hitting a fresh two-week low as expectations of a poor economic outlook and slowing demand growth prospects prompted an across-the-board commodities sell-off. Tin and nickel prices on the London Metal Exchange both fell more than 5 percent, with tin hitting a two-month low of $13,150 and nickel touching $14,776, its lowest since June 24.
"Oil data from the United States were very bearish today and that reinforced the negative sentiment for industrial commodities," said Justin Lennon, analyst at Mitsui Bussan Commodities. Benchmark copper closed at $4,720 a tonne from Tuesday's last bid at $4,880. Earlier the metal used in power and construction fell to $4,710, the lowest since June 23. A seasonal demand lull and fading demand from China, the world's largest consumer of copper, are also behind lack of confidence in the strength of recovery.
"There's still a certain degree of nervousness over how quickly the economy is going to pick up; nervousness amongst consumers about rebuilding inventory," said David Wilson, analyst at Societe Generale. Aluminium hit a one-month low of $1,545 a tonne. The metal used in transport and packaging closed at $1,550 from $1,618 on Tuesday. Stocks of aluminium in LME warehouses fell 2,500 tonnes, but remained close to record levels near 4.4 million tonnes.
Analysts expect rising stocks in the current quarter to put further downward pressure on copper and aluminium. "Our analysis of historical data shows the third quarter to have the largest build of copper and aluminium inventories into LME warehouses," Morgan Stanley said in a note.
Steel ingredient nickel closed at $14,950 a tonne from $15,650 on Tuesday, while battery material lead closed at $1,610 from $1,656. Zinc closed at $1,510 a tonne from $1,565 and tin closed at $13,295 versus $14,125. However, supporting tin is the build up of long tin positions of about 183,000 tonnes, nearly 10 times the level of LME stocks, compared with around 119,000 tonnes on May 1.
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