Copper slipped on Wednesday to its lowest in almost two weeks as investors sold off riskier assets on the back of renewed worries about growth in the United States, the world's biggest economy. Benchmark copper fell to $7,158 a tonne, its lowest since July 29, also weighed down by slowing Chinese factory output growth and a stronger dollar versus the euro, making metals more expensive for holders of other currencies.
The metal used extensively in power and construction closed at $7,191 a tonne, compared with $7,295 on Tuesday. Focus on Wednesday was on the US, where the Federal Reserve downgraded its outlook on the economy on Tuesday and said it would use cash from maturing mortgage bonds it holds to buy more government debt.
"The data out of the US recently has been pretty disappointing," said Jesper Dannesboe, senior commodity strategist. "Data suggested the outlook has weakened and Fed confirmed it yesterday," he said. Annual factory output growth in China, the world's largest consumer of industrial metals, slowed to 13.4 percent last month from 13.7 percent in June but beat forecasts of a 13.2 percent rise. China's refined copper output rose 16 percent from a year earlier to 398,000 tonnes last month, with production of all other base metals, except tin, also higher from year-ago levels.
But refined copper output was down 5.7 percent in July from a record 422,000 tonnes in June. "Chinese numbers were relatively supportive ... the market is looking for macro clarity, recent data have been mixed. Recent price action reflects some confidence in the idea that we're heading for mid-cycle moderation rather than double-dip."
Stocks of copper in LME warehouses, at around 408,000 tonnes compared with 6-1/2 highs above 555,000 tonnes in the middle of February, which resumed their downward trajectory this month after a brief upswing. Europe's largest copper producer Aurubis expects the positive trend seen in the first nine months of the company's financial year to continue into its fiscal fourth quarter, its chief Bernd Drouven said.
Aluminium prices was at $2,142 a tonne from $2,170 on Tuesday. Support for prices has been garnered from financing deals that are said to have tied up about 70 percent of LME stocks and plans to launch physically backed aluminium exchange traded products.That has led to concerns about availability and one reason why the contango - discount for cash material against the three-month contract - has narrowed to around $9 a tonne compared with above $30 a tonne in June.
Zinc ended at $2,037 a tonne from $2,085 on Tuesday, and stainless steel material nickel was at $21,695 from $22,200 a tonne. Lead touched $2,056 a tonne, its lowest since July 30 and was at $2,061 a tonne from $2,125 on Tuesday. Tin was bid at $19,850 a tonne from $20,600.
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