LONDON: Industrial metals plunged on Thursday as a collapse in nickel prices and a jittery mood among investors on wider markets combined to drag down copper by almost 5%.
Benchmark copper on the London Metal Exchange (LME), which hit a 10-year high of $9,617 a tonne last week, was on track for its worst day since October as it lost 4.2% to $8,720 by 1224 GMT.
Nickel, meanwhile, tumbled for a second day. Having reached a seven-year high of $20,110 last week, it traded at $16,175 a tonne, down 7.1% and set for its biggest one-day loss since 2016.
"It's been a long time coming," said Saxo Bank analyst Ole Hansen, pointing to a huge influx of speculative investment that drove all industrial metals to multi-year highs.
"The trigger was the nickel sell-off. Now we are seeing correction at full throttle."
The underlying supply and demand fundamentals for copper still point to higher prices in the longer term, but in the short term a rapid rise in US bond yields that has sent ripples through markets threatens all risk assets, including metals, Hansen added.
MARKETS: Chinese share indexes dropped by 2-3% on Thursday, with European equities also down and the dollar stronger.
FED: Comments by US Federal Reserve Chair Jerome Powell later on Thursday could move markets.
TECHNICALS: Copper's near-term technical outlook worsened after it broke below its uptrend line around $9,000 and Fibonacci support at $8,900. Next Fibonacci supports are about $8,660 and $8,440.
NICKEL: Announcements by China's Tsingshan and Russia's Norilsk Nickel have improved the nickel supply outlook, analysts said.
Citi said the greater supply from Tsingshan and efforts by Tesla to reduce the nickel content in its batteries threatens nickel's long-term price outlook.
"We are very concerned the impact this will have on speculative positioning at a time the market also goes into a large physical surplus," they wrote.
OTHER METALS: Benchmark aluminium was down 1.7% at $2,162 a tonne, zinc fell 2.7% to $2,712.50, lead lost 1.7% to $2,016.50 and tin dropped 3.1% to $23,350.