Copper hits two-month low

Copper prices hit a two-month low on Friday after weak jobs data from the United States eroded confidence in demand prospects and reinforced worries about the pace of economic recovery. Benchmark copper on the London Metal Exchange ended at $5,879 a tonne from $5,985 at the close on Thursday, having earlier hit $5,810, its lowest since August 3.
The metal used in power and construction is down about 10 percent since a 10-month high of $6,549 on August 28. Latest US jobs data showed employers cut a deeper-than- expected 263,000 jobs in September, lifting the unemployment rate to the highest in 26 years. US August factory orders also recorded their first drop in new orders in 5 months.
"This is capping a week of pretty poor data ... showing the pace and magnitude of this recovery is not as strong as people had hoped," said Calyon analyst Robin Bhar. On Thursday, weaker-than-expected September manufacturing data from the United States, the world's largest economy, triggered the sell-off.
US auto sales, which tumbled 23 percent in September as showrooms emptied after the government-funded boom from the "cash for clunkers" programme, further undermined sentiment. "There are fears creeping into the US economy and there is nervousness over the continuation of Chinese stimulus packages," said Sucden Financial analyst Steve Hardcastle.
But he added copper is still underpinned by labour problems at mines. These include a worker stoppage at the northern Chilean port of Antofagasta and a decision by workers at Chile's Spence copper mine to strike. Three-month aluminium ended at $1,804 a tonne from $1,858 on Thursday. The average forecast for the aluminium market surplus this year is about 1.7 million tonnes, according to a Reuters survey of analysts in July.
That surplus could be revised up if auto industry conditions deteriorate further, but some believe the outlook for aluminium is improving. "We note with interest Alcoa's increase in US rolled product conversion prices as we believe this is yet further evidence of improving domestic demand," Barclays Capital said in a note.
Battery material lead fell more than 5 percent to a two-week low of $2,070 a tonne. It ended at $2,115 a tonne from $2,195 on Thursday. One trader said lead was tracking copper. "US car sales data is a negative for lead," he said. Stainless steel ingredient nickel ended at $17,290 a tonne from $17,425 on Thursday, zinc at $1,880 from $1,913 and tin finished at $14,275 from $14,200.
Tin earlier fell to a one-month low of $13,700 on market talk that a dominant position controlling more than 90 percent was perhaps being scaled back. Easing worries about nearby supplies were also reflected in the premium for cash material over the three-month contract, down at around $550 a tonne from $730 last week.