Copper slid on Thursday as confidence crumbled after manufacturing data from the United States disappointed the market and reinforced expectations of lower prices until signs of stronger demand emerge. Benchmark copper on the London Metal Exchange ended at $5,985 a tonne from $6,155 on Wednesday.
Earlier the metal used in power and construction rose to $6,195 a tonne, the highest since September 23 on strong manufacturing data from China, the world's largest consumer of industrial metals. The metal rose 24 percent in the third quarter and is about 50 percent above levels seen in early April when markets started to believe the worst of recession could be over.
The manufacturing sector in the United States expanded in September for the second month running, but at a slower pace than expected. "Copper weakened in reaction to the manufacturing data," said David Thurtell, analyst at Citigroup. "It adds to the recent run of slightly disappointing data and makes the longs nervous ahead of payrolls tomorrow."
US non-farm payrolls are due on Friday. The numbers, although notoriously volatile, are used as a key gauge of the US economy, the world's largest. A higher dollar against the euro after the manufacturing data also weighed on industrial metals as it makes commodities more expensive for holders of other currencies.
Analysts say industrial metals markets were looking to OECD countries to pick up the demand baton from China. Copper prices were for most of the second quarter supported by Chinese government and consumer buying for stockpiles. But this buying has petered out and can be seen in falling imports. China's imports of refined copper fell about 25 percent in August from the month before as rising domestic stocks and weak prices ended the buying frenzy.
"The market is pricing in expectations of lower Chinese imports," said Gayle Berry, analyst at Barclays Capital. "The market is struggling for direction ... It is sceptical as to whether or not these improvements in forward looking economic indicators will translate into stronger OECD demand." Rising stocks of copper in LME warehouses, which at around 346,000 tonnes are the highest since May, also weighed.
News that union workers at Chile's Spence copper mine voted to strike on Wednesday, rejecting BHP Billiton's collective contract offer, sets a worrying precedent for key labour talks in the world's top copper producer. Aluminium closed at $1,858 from $1,890 on Wednesday having hit $1,910 earlier, its best level in over a week.
Zinc rose to a two-week high of $1,970 a tonne and ended at $1,913 from $1,968. Battery material lead closed at $2,195 from $2,284 and steel ingredient nickel at $17,425 from $17,850. Tin closed at $14,200 from $14,900.
Earlier it fell to $14,100 a tonne, the lowest since September 14, partly because of market talk that a dominant position controlling more than 90 percent of stock warrants and cash contracts was being scaled back. Worries about nearby supplies of tin because of the dominant holding had pushed the premium for cash material over the three-month contract to about $700 on Tuesday. The spread was last offered at $500 a tonne.