NEW YORK/LONDON: Copper fell to a one-week low on Monday, tracking a broader range of commodity markets lower, as near-term demand prospects for industrial metals continued to look limited amid signs of weakening economic fundamentals.
After rallying last week to their priciest levels in 4-1/2 months on the back of a $150 billion infrastructure plan in China and the promise of policy easing by the European Central Bank and US Federal Reserve, copper prices fell after a disappointing survey of German business sentiment underscored global economic worries.
Those global economic fears were also being reflected in sluggish demand signals in China in front of a week-long national holiday, as Chinese manufacturers were said to be still waiting on orders related to Beijing's infrastructure expansion plans.
"There continues to be a concern that there is a global economic slowdown underway," said Bart Melek, head commodity strategist with TD Bank Financial Group.
"There is a lot of concern that the actual, physical demand for this stuff is not going to materialize for a while."
COMEX copper for December delivery shed 5.75 cents or 1.5 percent to settle at $3.7315 per lb, after dealing from a more than one-week low at $3.7155 to $3.78.
On the London Metal Exchange (LME), benchmark three-month copper dropped $98.50 to finish at $8,183 a tonne, pulling further away from last week's 4-1/2 month high at $8,422.
"People are in a wait-and-see mode. I think markets don't appreciate what the impact (of central bank measures) can be. Most of these measures are unlimited in nature, they take time to flow through. We see prices pretty well supported through to the year-end," Macquarie analyst Ryan Belshaw said.
After the London market close, the head of the International Monetary Fund (IMF), Christine Lagarde, said the IMF is set to cut its forecast for global growth next month when it updates its projections for the world economy.
"We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July, and our forecast has trended downward over the last 12 months," Lagarde said in a speech previewing the IMF/World Bank meetings in Tokyo on Oct. 12-14.
With an uncertain growth outlook and even murkier demand view for this year, copper investors saw little reason to take on any large positions, data issued by the Commodity Futures Trading Commission (CFTC) showed Friday.
Speculators trimmed their net copper length by 345 lots to 17,164 contracts.
On the fundamental front, daily LME data showed copper stocks rose 475 tonnes to 219,950 tonnes, adding to last week's 2,775 tonne increase, while Shanghai inventories jumped by 10,428 tonnes.
The global refined copper market was nevertheless facing a deepening production deficit this year.
In its latest monthly bulletin, the International Copper Study Group (ICSG) said the market had a 473,000-tonne deficit in the first half of this year.
"In the medium to long term, we believe the (copper) price has further potential. On Friday, for instance, the ICSG reported a global copper market deficit. (Also) the latest approval of infrastructure projects is likely to keep demand for metals in China at a high level," Commerzbank said in a note.
In other metals, aluminum closed down $35 at $2,080 per tonne and tin shed $75 to end at $20,650.
Zinc fell $14 to close at $2,103 a tonne, nickel dropped $200 to end at $17,975 and lead lost $21 to $2,267.
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