Copper fell to a near seven-month low on Tuesday, extending losses for a fifth straight session as investors worried about a possible bank default in Cyprus and as the euro slid. Bargain hunting sent prices higher during afternoon European trading, but gains evaporated and sellers won the upper hand amid renewed worries about the outcome of a parliamentary vote in Cyprus over a bank bailout deal.
Three-month copper on the London Metal Exchange fell 1.2 percent to $7,486.25 a tonne in electronic trading, the weakest since August 21 and breaking below a November low of $7,506. Copper had ended at $7,530 a tonne in the last session of open outcry trading. Aluminium ended virtually flat, up 50 cents at $1,936.50 a tonne after touching an intraday low of $1,932 and sinking on Monday to the lowest since November 12. "There's ongoing nervousness on the Cyprus situation and we're also getting bits of other data coming out which are slightly bearish," said Citi analyst David Wilson. "It's a poor macro overlay and then underlying fundamentals don't look great either." Copper and aluminium have shed between 10 and 11 percent since touching highs in February, as worries grew about tepid demand and rising inventories.
Some investors and analysts had viewed the losses as overdone, including Gianclaudio Torlizzi, a partner at metals consultancy T-Commodity, who said in the morning: "We have just sent an alert to our clients advising them to buy," referring to copper. The bulls and bears could pick and choose among mixed data to bolster their arguments. In LME-registered warehouses, copper inventories were close to 9-1/2 year highs, while nickel stocks neared their highest since February 2010, signalling a lack of demand.
Markets have waited in vain for China to resume buying metals after its Lunar New Year holiday, and as its once-in-a-decade leadership transition winds up and the seasonally strongest second quarter gets underway. "I think the hopes that China growth would accelerate this year seem to be diminishing. China is changing and you are not going to see these double-digit growth rates going forward," Wilson said. China accounts for at least 40 percent of global copper consumption, with the construction industry a particularly crucial source of consumption growth. Copper is used widely in construction and power cables.
Among other metals, three-month tin closed 1.1 percent weaker at $22,850 a tonne, while zinc failed to trade in closing rings, being bid at $1,922.50, up 0.2 percent from Monday's close. Lead shed 0.7 percent to close at $2,170 a tonne and nickel gave up 0.4 percent to $16,535. The global nickel market was in surplus by 17,000 tonnes in January 2013, a monthly bulletin from Lisbon-based International Nickel Study Group (INSG) showed on Tuesday. Nickel stocks held by producers were at 87,400 tonnes in December 2012, down from 83,700 tonnes in November.