Copper prices tumbled to two-week lows on Tuesday as the rout in equities undermined growth sentiment, though volumes were subdued by a holiday in China and a market waiting for clues on demand prospects in the country. Benchmark copper ended 2.2 percent down at $4,508 a tonne. The metal used widely in power and construction earlier hit a session low of $4,467.
Traders said falling equity prices were being viewed as a sign of problems for the global economy. They also said the sell-off accelerated after the New York market opened. Overall world stocks were down 1 percent. Asia recorded the biggest losses, tracking declines in European and US shares on Monday.
China, which accounts for nearly half of global copper consumption estimated at 22 million tonnes this year, started its week-long Lunar New Year holiday on Monday. "We'll have to wait and see what happens when it comes back (after the holiday)," said Macquarie analyst Vivienne Lloyd. "We're waiting for production reports from the miners, which should be interesting."
Glencore will detail its metals output on Thursday. Copper garnered support from a Citi report saying that Chinese commodity funds had accumulated long copper positions on the Shanghai Futures Exchanges (ShFE). "Over the last month or so it has been noticeable that a number of major Chinese commodity funds have altered their copper positioning on ShFE, becoming increasingly positive (on) copper, according to the daily top 20 fund positioning data released by the Exchange," a Citi note said.
"While the data is not comprehensive...it does provide a picture of key fund attitudes towards the red metal." Traders said losses on industrial metals had been limited by the tumbling dollar. The lower US currency makes metals priced in dollars cheaper for non-US firms. Three-month aluminium lost 1.3 percent to $1,483 a tonne, while lead was down 0.7 percent at $1,811.5 and nickel fell 1.7 percent to $8,090.
Zinc fell 2.3 percent to $1,682 a tonne from an earlier three-month high of $1,767. The metal used to galvanise steel has been boosted in recent weeks by expectations of tighter supplies. Tin gained 0.2 percent to $15,710. The soldering metal earlier hit $16,045, its highest since late October, on worries over falling stocks and supplies. Stocks of tin in LME approved warehouses, at 4,515 tonnes, have fallen more than 30 percent since late December. Also helping tin was news that Indonesia exported 2,486 tonnes of refined tin in January, a 63 percent drop from the same month last year.
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