Copper slid on Wednesday, extending its deepest monthly drop in almost a year in April, due to concerns over growth in top metal consumer China and in the United States after data suggested the world's two biggest economies remain fragile. Nickel touched its lowest level in 3-3/4 years in broad-based selling after data showed growth in Chinese manufacturing unexpectedly slowed last month.
Also LME nickel inventories climbed by 1,440 tonnes to a new record of 178,476 tonnes, evidence of a market surplus. Three-month nickel on the London Metal Exchange closed down 3.7 percent at $14,820 a tonne after earlier tumbling to a session low of $14,788 a tonne, the weakest since July 2009.
Benchmark copper also ended 3.7 percent weaker at $6,795 per tonne after touching a session low of $6,786.25, close to the 18-month lows hit last week. Copper fell by more than 1 percent in the previous session and lost 6.4 percent in April, the most since May 2012. By contrast European stock markets had the best April since 1997, and the month marked the 11th straight monthly gain for the broad STOXX Europe 600 index.
"Equities tend to look further ahead, so I think to some extent it's an expectation of where the world might be in a year's time," Standard Chartered analyst Dan Smith said. "The problem is that China is looking quite poor, which has really weighed on the whole base metals complex. Another problem for base metals is that Europe still looks pretty abysmal."
China's official purchasing managers' index (PMI) declined to 50.6 from March's 11-month high of 50.9 as new export orders and input prices contracted. China accounts for 40 percent of global copper consumption and Europe around 20 percent. US data showed companies hired the smallest number of employees in seven months in April and manufacturing growth slowed, providing more signs that the economy is encountering a soft patch.
The global copper market showed a 70,000 tonne surplus in January this year, compared with a 60,000 tonne deficit in the same month last year, reflecting lower demand for the metal, which is widely used in construction and power cables. On the LME, trade volumes were weak in Asian trading but picked up for copper as it broke below the $7,000 a tonne mark and amounted to about 22,000 lots by the close of open-outcry activity. Most markets in Asia were closed on Wednesday, and many markets in Europe including France and Germany were also shut for Labour Day holiday. The Shanghai Futures Exchange will reopen on Thursday.
Financial markets will focus later in the day on the outcome of a US Federal Reserve two-day policy meeting and on Thursday will look to the results of a European Central Bank meeting. Fed members are widely expected to keep the current pace of bond buying at $85 billion a month due to recent weak economic data. Aluminium failed to react to news that Alcoa said it could shut down as much as another 11 percent of its smelting capacity.
The company, which already has 568,000 tonnes, or 13 percent, of its smelting capacity sitting idle, said it will review 460,000 tonnes of capacity for curtailment over the next 15 months. LME aluminium did not trade in closing open outcry activity, but was bid at $1,824 a tonne, down 2.4 percent from Tuesday's close. Lead closed 2.4 percent down at $1,979 after hitting an eight-month low of $1,970 and zinc ended 1.5 percent lower at $1,840. Tin also failed to trade in closing rings and was bid $19,950 a tonne, down 2.1 percent.
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