Copper fell on Monday as part of a broad decline across asset classes, weighed down by eurozone debt worries and concerns that a cooling economy is crimping demand from top consumer China. Copper, used in power and construction, for delivery in three months on the London Metal Exchange ended at $8,795 a tonne from $9,071 at the close on Friday.
Base metal prices fell across the board, with tin hitting its lowest since January and nickel trading at its lowest since late November. "Not only do you have concerns about Europe at the moment, and that's going to be an issue for the next few days, you continue to have concerns over Chinese growth," analyst Michael Widmer of Merrill Lynch-BoA said.
Following a three-notch cut of Greek debt by Fitch Ratings on Friday, which pushed the country deeper into junk status, rival Standard & Poor's cut its outlook for Italy to "negative" from "stable" on Saturday. A stronger dollar makes commodities such as metals more expensive for holders of other currencies.
In Asia, China's factory expansion slowed further in May while price pressures eased, a survey showed, reinforcing signs that the economy is responding to monetary tightening steps aimed at taming inflation.
China's refined copper imports dropped 16.6 percent in April from the previous month due to tight credit and cheaper domestic stocks, although arrivals were higher than February's 27-month low. China is the world's largest consumer of industrial metals, accounting for nearly 40 percent of global demand estimated at around 21 million tonnes this year.
Nickel, lead and tin were all down more than four percent at one point with worsening chart pictures speeding liquidation. "Bearish comments over the metals fundamental outlook from Norilsk, further dent(ed) sentiment," said Standard Bank.
Global nickel consumption will grow by more than 5 percent in 2011 and output will expand by 10 percent, bringing the market into balance from a deficit a year ago, the chief analyst for Norilsk Nickel said on Monday. Nickel closed at $22,400 from $23,540, having fallen to $22,347 a tonne - its lowest since November 26.
At LME warehouses, rising copper inventories have put pressure on the metal. The latest data shows stocks rose to 468,175 tonnes. The arbitrage or price differential between Shanghai Futures Exchange and the LME continues to discourage imports, eroding a plank of copper demand. "With the arbitrage window firmly shut, fresh inflows of metal into LME warehouses resuming....and a general mood of risk aversion, the metal is on the back foot and reliant on technical signals to provide support," Standard Bank said in a note.
LME copper fell back below the 200-day moving average around $8,820, sending a sell signal to traders who watch chart-based patterns for cues on direction. Aluminium ended at $2,478 a tonne from $2,500. It earlier touched its lowest in two months at $2,465. Battery material lead finished at $2,419 from $2,507. Zinc ended at $2,119 versus $2,151 a tonne. Tin stood at $26,725 at the close - it hit a trough since January 12 at $26,500 - from $27,750 a tonne on Friday.
Comments
Comments are closed.