Copper slid to its lowest in more than a week on Monday as analysts started to talk about falling imports and the possibility of higher exports by China, the world's largest consumer of industrial metals. Aluminium and nickel fell to $1,802 a tonne and $16,282 a tonne respectively, their lowest since July 30.
Zinc touched $1,796.50, its lowest since Sept. 2 and lead hit $2,025, its lowest since August 27. Benchmark copper on the London Metal Exchange slipped to $6,070 a tonne, its lowest since Sept. 2. The metal used in power and construction ended the session at $6,140 a tonne from $6,250 at the close on Friday. Bullish economic data from China last Friday was seen supporting sentiment.
But weighing on prices was news that Chinese imports of unwrought copper and products fell 20 percent in August from July. "Chinese copper imports will continue to fall back ... There is evidence of oversupply in a number of metals markets," said Dan Smith, analyst at Standard Chartered. Also on the horizon is the prospect that China could become a net exporter of some metals including copper because LME prices are higher than those in Shanghai.
"Consumers are a little bit more downbeat then they were, prices will pull back in the next month or two," Smith said. Stocks of copper in LME warehouses, up about 25 percent since the middle of July to just below 320,000 tonnes, will also undermine prices, as will the firmer dollar, which makes commodities more expensive for holders of other currencies.
The dollar rose against a basket of six currencies because of a trade dispute between the United States and China. "One of the key factors that has been driving copper is the dollar," said mining analyst Charles Kernot at Evolution Securities. "The other is the world economy." Copper prices have doubled since the start of the year, largely due to Chinese restocking, along with speculative buying and signs of a gradual recovery in the world economy.
However, gains have recently been capped by uncertain about the power and pace of the recovery. Talk of oversupply also dampened the outlook. "Copper supply is expected to increase, with news of Codelco raising production targets by 8 percent this year and could weigh on the metals outlook," ANZ said in a note. Codelco is based in Chile. It is the world's top copper producer.
In August the company said its copper output in the first half of this year was up 16 percent. Aluminium closed at $1,834 a tonne from $1,845 on Friday, zinc at $1,831 a tonne from $1,865, lead at $2,105 from $2,065, tin at $14,200 from $14,400 and nickel at $16,645 from $16,950. Worries about supplies of tin for immediate delivery have for some days now boosted the premium - at around $550 a tonne - for cash material over the three-month contract.