Copper hit a 7-week low on Monday as the euro fell and as concern about global growth, heightened by disappointing corporate earnings, dented risk appetite and overshadowed solid US third-quarter economic growth. Activity was expected to be thin as Hurricane Sandy closed in on the US East Coast, causing regulators to shut US stock markets, possibly until Tuesday, although Comex futures, such as those in copper, will trade electronically.
Benchmark three-month copper on the London Metal Exchange closed down 1.5 percent at $7,699 a tonne, having earlier touched $7,670, its lowest since September 6. Tin and aluminium also touched their lowest since early September, while nickel and zinc reached their lowest since late August. The euro was down slightly versus the dollar, hurt by uncertainty over whether Greece can agree to a deal on austerity and with no sign of when Spain might request aid.
A weaker euro makes dollar-priced metals costlier for European investors. "It's the reality of a bad macro-economic backdrop that's weighing on sentiment, some of the latest signs of which come from corporate earnings," said Ross Strachan, analyst at Capital Economics.
"We think all base metals can fall over the next six months and we expect them to." US economic growth picked up slightly more than expected in the third quarter, data showed on Friday, though global giants Apple and Amazon, European car maker Renault and electronics group Ericsson all posted results that fell short of expectations. In the US data showed consumer spending rose solidly in September, but against that, manufacturing activity in the Chicago Midwest fell in September versus August. "Recent data says to me the economy is stabilising but it's not growing as quickly as we would want," Societe Generale analyst Robin Bhar said.
"The consumer confidence data is not too surprising considering that things are looking up slowly but this is not going to spark a rally because there is a lag between the consumer confidence number and how that feeds through into the real economy." Inventories of copper in LME-monitored warehouses saw significant inflows of material, rising by 20,650 tonnes to 240,450 tonnes, latest data shows.
"We shouldn't be getting this sort of stock increases in Q4 that traditionally is a very strong quarter so it adds to the negative perception that out there is still a pretty tough demand environment," Bhar said. Battery material lead fell 0.4 percent to $2,007.50 a tonne, with LME data showing a large rise in stocks all concentrated in the backlogged port of Antwerp.
Total lead stocks now stand at 326,675 tonnes, their highest since February, though most of the metal is unavailable, tied up in backlogged warehouse locations or held by investors as collateral for financing deals. Stainless-steel ingredient nickel fell 0.3 percent to $15,950 a tonne, having touched its lowest since mid-August at $15,758. Soldering metal tin traded at $19,555 a tonne from $19,800 a tonne, having touched $19,511, its lowest since early September while zinc fell 0.5 percent to $1,825 a tonne, having reached its lowest since late August at $1,812. Packaging metal aluminium was untraded at the close but was last bid down more than 1 percent at $1,897, after hitting its lowest since early September at $1,887 a tonne.
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