Industrial metals prices fell on Tuesday in a cross-commodity sell-off again triggered by worries about a general economic slowdown, analysts said. Benchmark metal copper on the London Metal Exchange, for years the darling of fund managers looking for a high-return asset, ended the day down $120 at $7,360 per tonne, gold hit its lowest in 3-1/2 months and Brent oil fell more than $1 to less than $70.40 per barrel.
"It's not just the LME, it's precious metals and energy. It's not peculiar to industrial metals, it's a general sell-off across commodities," ABN Amro analyst Nick Moore said. In New York, copper for September delivery ended down 8.15 cents, or 2.4 percent, to $3.3165 a lb on the New York Mercantile Exchange's COMEX division, just off the bottom of its $3.3135 to $3.3980 trading band.
Fears about the global economy have knocked stock markets and boosted bond yields recently - which has in turn dragged down commodities - and there was more bearish news for shares on Tuesday.
Stocks in the United States traded slightly lower as economic reports on housing and consumer confidence outweighed the positive impact of take-over offers. London-listed miners Rio Tinto, BHP Billiton, Anglo American, which often track the prices of the metals they produce, were down between 0.4 and 1.3 percent.
At its current price, copper is almost $1,500 cheaper than its peak in May last year, but around 17 percent up since the start of the year. Concerns about mine strikes in Peru and Chile failed to offset the negative sentiment sweeping the market.
"A lot of the strike news is already factored into prices and I do not think we are going to see a major reaction," an LME trader said. Subcontract workers at Chile's Codelco said on Tuesday they would intensify protests after protesters blocked roads and set fire to buses close to mines owned by Chilean copper miner Codelco.
Codelco said output was not affected at four of its five divisions, including Codelco Norte, which accounts for more than half the company's copper production. Workers at Southern Copper Corp, one of the world's biggest copper producers, began striking on Saturday. A company official told Reuters that it was too early to determine the effect on output.
"Neither the Peruvian nor the Codelco strike will be long lasting," analyst David Thurtell at BNP Paribas said, adding that strikes at Codelco in the past had been resolved quickly. "But the prices will hold around $7,200/7,500 while the strikes go on," he said.
Striking workers at Xstrata Plc's Canadian Copper Refinery (CCR) in Montreal haven't had contact with the company and officials say talks are unlikely until after a national holiday on July 2.
The refinery, which supplied 370,000 tonnes of copper cathode last year, has been operating at a greatly reduced rate since 430 workers walked out on June 11 after labour talks broke down over salary increases and pension benefits.
Lead for three-months delivery, which has gained more than 60 percent since the end of last year, touched a new high of $2,745 per tonne, and in so doing overtook aluminium futures for the first time. But even lead was not immune to the wave of liquidation and ended the day at $2,580, down $130 from Monday's closing price. "The market is driven by speculation that supply would be curbed by production cuts in China as lead smelters reduce production on rising costs for concentrate," Dresdner Kleinwort said in a research note.
Chinese lead smelters are cutting production because of high prices of imported concentrate and reduced exports of refined lead due to a new tax, industry sources said last week.
"Also, Chinese customs statistics show that during the January-to-May period, lead exports were down 49.1 percent from the same period last year," the bank said. Industrial metals in general would be prone to falls as the market enters the traditionally slower third quarter, ABN's Moore said.
"People are saying the metals have done quite well in the first half, but in the second half we could see increased availability of metal." Aluminium closed at $2,700, down from $2,721. Nickel closed at $37,495, down from $39,050, zinc was down $130 to $3,400 and tin was $150 lower at $13,925/13,950.
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