Wednesday, 22 July 2015 21:50
LONDON: Copper prices hit a two-week low on Wednesday as worries mounted over demand from top consumer China and equity market losses around the world reinforced negative sentiment.
Benchmark copper on the London Metal Exchange closed down 1.7 percent at $ 5,360 a tonne from $ 5,455 at Tuesday’s close. Earlier in the session the metal widely used in power and construction touched a low of $ 5,346.50.
“Confidence in Chinese growth and demand is still falling,” said Eugen Weinberg, analyst at Commerzbank. “Equity markets are weaker generally and investors are concerned.”
China accounts for about half of global consumption estimated at about 22 million tonnes this year.
Traders say there is a good chance of copper revisiting the six-year low of $ 5,240 hit on July 8.
“The stronger dollar this afternoon started another bout of selling,” one copper trader said.
A higher U.S. currency makes dollar-denominated commodities such as copper more expensive for holders of other currencies.
There was some support from the potential for prolonged disruption because of strikes in leading producer Chile.
Three-month aluminium slipped to $ 1,651 a tonne in early trading, its lowest since July 8. It ended at $ 1,659 a tonne from $ 1,661.
The metal used in transport and packaging is under pressure from an oversupplied market because of rising Chinese exports.
“The continued outflow of aluminium from China is quickly pushing what was a relatively tight market into surplus,” ANZ said in a note. “Combined with worrying signs of weak demand outside China, prices are likely to remain under pressure in the coming months.”
Norsk Hydro estimates global aluminium inventories at about 14 million tonnes. That’s more than three months of consumption forecast at about 54 million tonnes this year.
Tin earlier dropped 5 percent to a one-week low of $ 14,600. It ended at $ 14,800 from Tuesday’s close at $ 15,375.
Traders said losses were mainly due to funds covering long positions and taking on new short positions.
“Everybody is waiting to see whether Indonesia will be able to limit exports,” one trader said.
To halt illegal exports, Indonesian producers from Aug. 1 will need to prove their tin comes from government-certified mines before it can be shipped.
Zinc fell to $ 2,000 from Tuesday’s close at $ 2,035, lead to $ 1,775 from $ 1,790 and nickel to $ 11,475 from $ 11,675.