Copper prices dropped for a third day and most other industrial metals also fell as concerns over demand from top consumer China and declining oil prices pushed investors to sell. "There is higher risk aversion among market participants, with the oil price down as well, and there are lingering concerns about China," said Commerzbank analyst Daniel Briesemann.
"There are worries over China's economy and rising (US) interest rates, which are seen as a sign of tighter liquidity," he said, predicting that metals prices would fall further. Benchmark copper on the London Metal Exchange was down 0.4 percent at $6,780 a tonne in official rings after hitting $6,761, the lowest since Nov 20. The metal used in power and construction has fallen 3.1 percent from Friday's close.
Copper moved below its 50-day moving average at around $6,798. Headline inventories in LME-registered warehouses fell by 4,950 tonnes to 191,725 tonnes, the lowest since July 2016 and down around 40 percent from a high of 313,850 in September, supporting prices. Copper stocks in Shanghai Futures Exchange warehouses have however risen by around 60,000 tonnes since September, reducing fears of shortages.
The global copper market will be balanced for the foreseeable future even as mine supplies tighten and demand from China, the biggest producer and consumer of metals, remains strong, copper company executives said. China's environmental crackdown is the "biggest uncertainty" facing the nation's copper smelters, said an executive from Jiangxi Copper Co.
Economic growth in China has shown signs of slowing and blue-chip stocks were sold off in the last week. Peru, the world's No. 2 copper producer, will likely churn out 2.5 million tonnes of copper in 2018 and 3 million tonnes in 2021, the vice minister of mining said. Crude prices fell for a third day ahead of a summit this week at which Opec and Russia look set to prolong supply cuts until the end of 2018. LME aluminium did not trade in official rings but was bid down 1.3 percent at $2,075 a tonne. Nickel traded 0.1 percent lower at 11,340; zinc was bid down 0.9 percent to $3,131; lead traded up 0.7 percent at $2,443; and tin was bid 0.6 percent lower at $19,425.