LONDON: Copper prices on Monday fell to one-month lows as the prospect of a debt default at China property developer Evergrande Group fuelled a sell-off across financial markets and investors headed for the safe haven dollar.
Benchmark copper on the London Metal Exchange had dropped 3.2% at $9,010 a tonne at 1603 GMT. Prices of the metal used widely in the power and construction industries earlier touched $9,005 a tonne, the lowest since Aug. 20.
“Copper prices are falling in sympathy with risk-off trading and weak sentiment because of Evergrande,” said Giles Coghlan, analyst at broker HYCM. “It is a concern in the short term, but I don’t think it is going to be another crisis like Lehman’s because of the high level of down payments you need to make in China for property.”
RISK-OFF: Evergrande has been scrambling to raise funds to pay lenders, suppliers and investors, with regulators warning that its $305 billion of liabilities could spark broader risks to China’s financial system if not stabilised.
DOLLAR: A higher US currency makes dollar-denominated commodities more expensive for holders of other currencies, which would subdue demand.
TECHNICALS: The sell-off accelerated after the New York open, which pushed copper through strong support around $9,060, where the 200-day moving average sits. The first upside barrier comes in at around $9,380, the 21-day moving average.
NICKEL: Prices of the stainless steel metal slipped as traders shrugged off the idea of Indonesia imposing export taxes on products with less than 70% nickel content to drive expansion of the country’s domestic processing industry.
Nickel was down 1.7% to $19,030 a tonne.
STOCKS: Nickel prices are expected to be supported by falling stocks of the metal in LME registered warehouses , which at 169,992 tonnes have dropped 35% since the middle of April.
OTHER METALS: Aluminium was down 0.8% at $2,862 a tonne, zinc fell 2.4% to $3,014 a tonne, lead ceded 1.3% to $2,153 and tin lost 1% to $33,780.