Copper ended down 1.6 percent on Tuesday after failing to hold $7,000 per tonne and in anticipation of further stock inflows on the back of easing demand from China, traders and analysts said.
Leading European shares closed up, but mining firms weighed on the London Stock Exchange 100 index with BHP Billiton and its take-over target, Rio Tinto, down 1.0 and 4.74 percent, respectively. Copper for delivery in three months on the London Metal Exchange ended at $6,930 a tonne, down $110 from Tuesday, but narrowing losses after touching a low of $6,856.
"The next major support level on the downside is at $6,750 a tonne and a failure to hold above here would see a fall to $6,000," analyst Robin Bhar at UBS said in a report.
Copper has lost some 20 percent since the start of October due to signs of weakening demand from China, the world's top consumer of the metal and global financial markets losing ground on bad news about credit losses. "We tested higher levels up past $7,000 earlier but with no momentum buying on the follow through we have seen the price drift lower," an LME trader said.
Copper hit an intraday high of $7,030 before easing further. Rising inventories as an evidence of weakening demand weigh on prices. Stocks of copper in LME warehouses stand at 177,875 tonnes, up more than 80 percent since July. The abundance of copper could be seen within the spreads - the difference between the cash and forward-month material.
Contango - a discount for cash material compared to the three-months price - was at $42 versus a premium of $156 in August. "Some funds might be buying for the longer term because other commodity prices are rising, but in the short term people sell as they see inventories keep rising," a second LME trader said.
Tin ended flat at $16,900 a tonne, after trading at $17,050 close to its all-time high of $17,225 it hit in early November. "Tin's tapping at the door," the second LME trader said, referring to the metal's recent rally towards its all-time high.
"There's good demand for it, but $190 of contango curbs appetite. I'm not very bullish, but not bearish either," he said. Tin prices have gained nearly 50 percent year-to-date on reduced availability of key Chinese material, uncertainties in terms of Indonesian production and the world's second largest producer after China, and strong demand.
Aluminium rose $8 to $2,578. The technical outlook for the metal was positive, dealers said, while high-energy prices were expected to keep costs high, underpinning prices. However, rising stocks in LME warehouses capped prices up 7,275 tonnes to 919,175. Three-month zinc firmed $9 to $2,640 per tonne.
"Charts still look negative and rallies should remain vulnerable," analyst Edward Meir at MF Global said. Lead was up $15 at $3,480, while key stainless steel ingredient nickel fell $300 to $33,400.