Copper tumbled to its lowest in nearly a month on Tuesday as weak housing market data from the world's largest economy, the United States, reinforced worries about growth and demand. Following copper's lead, aluminium hit its lowest in more than a month; zinc, lead and nickel all hit their lowest since late July; and, tin hit its lowest in nearly two weeks.
Benchmark copper on the London Metal Exchange ended at $7,137 from a close of $7,255 on Monday. Earlier, the metal used in power and construction touched $7,105 a tonne, its lowest since July 28. The latest trigger was news that sales of previously owned US homes dropped more steeply than expected in July to their lowest pace in 15 years, implying further loss of momentum in the economic recovery.
"Very poor home sales numbers have seen base metals weaken significantly," said David Thurtell, analyst at Citi. Also weighing was LME copper stocks, which rose for a second day running, up 1,625 tonnes to 403,825 tonnes. Overall stocks are still down some 150,000 tonnes since a mid-February peak, in part because of strong buying from top consumer China.
Aluminium, used in transport and packaging, was untraded at the close, but bid at $2,028 a tonne from $2,040 on Monday, having earlier hit its lowest since July 22 at $2,010. Traders are watching a premium, or backwardation, of around $6 a tonne on LME aluminium to be delivered on Wednesday and bought back on Thursday - known as the tom/next, and often used to lend metal to entities who are short.
The backwardation has emerged because of two significant positions holding between 30 and 40 percent of aluminium stock warrants and cash contracts. Worries about the availability of supplies has also tightened the discount for cash over three-month aluminium prices to around $1 currently from $33 in early June.
Tin ended at $20,400 from $20,460 on Monday. Earlier it touched $21,160 a tonne, its lowest since August 12. It has been underpinned by ongoing tightness in supply that has pushed the premium for cash tin over the three-month price to $45 a tonne. Last week it surged to $200. Zinc closed at $1,991 from $2,044 on Monday, having earlier on Tuesday touched a session low of $1,985. Battery material lead ended at $2,013 from $2,048. That compares with a session low of $2,000. Stainless steel making ingredient nickel ended at $20,600 from $21,200. Earlier on Tuesday it saw $20,550.
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