Industrial metals prices fell on Tuesday, weighed by fears about slowing demand and increased supply, analysts said. London Metal Exchange copper, a key gauge of metals markets in particular and the real economy in general, was down almost 2 percent at $6,690 per tonne at the end of the final open outcry session from Monday's closing price of $6,800.
Copper and other industrial metals have been knocked by worries about slowing economic growth and the possibility of recession in the United States. The price of copper has fallen by around 14 percent since the start of November - though it is still 5 percent up on the year to date - and inventories of metal sitting in LME-registered warehouses are up 13 percent.
"The weakness of the last few days is causing weakness today," analyst Eugen Weinberg at Commerzbank said. "There are many trend-followers and sentiment in the market is changing right now. The trend is clearly not a friend of the market," he said. As well as worries about falling demand in Western economies, the market is taking account of increased supply as miners respond to historically high prices by digging more metal, analysts said.
Lead was one of the big losers, falling around 4 percent before recovering slightly to close at $2,885 per tonne from $2,955. "On the one hand, inventories in LME warehouses rose 325 to 44,350 tonnes. However, the more dominating factor was speculation that Ivernia might resume production at its Magellan mine in Australia," Dresdner Kleinwort said in a report.
Mining firm Ivernia shut the mine in April after health officials halted exports after finding evidence of lead poisoning. Other metals were also sold heavily, with zinc falling almost 5 percent in earlier trading before ending the official session at $2,425 per tonne from $2,490, and steelmaking raw material nickel ended the day more than 4 percent lower at $25,695 per tonne.
"With LME stocks still rising and physical markets soft, we expect further down-side moves in the short-term," analysts at Barclays Capital said. Tin was unchanged at $16,650 per tonne, while aluminium was up $7 at $2,467 per tonne.
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