Copper slipped on Monday as investors fretted over weaker demand for metals and the market remained wary of making big bets ahead a key US rate decision.
Lead prices dropped 5.2 percent at one point after an Australian state environmental body strengthened expectations of lead exports resuming from Ivernia's suspended Magellan mine in Australia. Nickel also fell 4.4 percent at one stage, reversing gains after jumping 5.2 percent on Friday. Copper for delivery in three months on the London Metal Exchange closed at $6,825 per tonne, down $86 from Friday.
At the New York Mercantile Exchange's COMEX division, copper for March delivery closed down 3.30 cents to $3.0930 a lb, after dealing in a session range between $3.0705 and $3.14. "Copper lacks direction," analyst Daniel Hynes at Merrill Lynch said. "In the background, we've still got the worsening US economy which is weighing on metals, in particular copper."
Copper has lost almost 20 percent since the start of October on signs of weakening demand from China, the world's top consumer of the metal, and credit losses have weighed on industrial metals. "Market participants have largely sidelined themselves ahead of news out later this week, in particular, the Fed interest rate change announcement," an LME trader said.
Talk of consolidation in the mining sector underpinned London-listed miners, like Rio Tinto and BHP Billiton as newspapers reported Brazilian miner Vale has hired bankers to consider a bid for UK-listed rival Xstrata. Base metals are poised for a bumpy ride in 2008, with uncertainty about global demand and inventories.
Stocks of copper in LME-registered warehouses currently stand around 188,000 tonnes, having almost doubled since July - but are still less than four days of global consumption. Three-months lead ended 5 percent lower on the back of higher supply prospects. The metal, used by battery makers, fell to $2,540, down $135 from Friday.
An Australian state environmental body said Ivernia's plan to export lead through Fremantle port was unlikely to cause any safety issues, though a final decision is at least two weeks away. Nickel was down $1,100 at $26,300, while three-months zinc was down at $2,380/2,385 against $2,430. Aluminium fell $20 to $2,462 and tin was flat at $16,700 from Friday's last quote.
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