“Daily Mining and Exploration News on Copper and Aluminium”—-Copper and aluminium price tumbled to their lowest in almost three years on Wednesday, dragged down by worries about slowing demand for metals and a strong dollar.
Major U.S. stock indexes fell more than 3 percent in early trade while European stocks sank 5 percent, led lower by falling mining stocks such as BHP Billion and Rio Tinto.
London Metal Exchange copper for delivery in three months dropped to $4,099 a tonne, its weakest since November 2005 and in Shanghai, copper plunged by its 5 percent limit to 36,070 yuan ($5,278) a tonne, a three-year low.
By 1409 GMT, copper was at $4,125 per tonne versus $4,500 on Tuesday. The metal, used in power and construction, has more than halved from a record high of $8,940 a tonne in July.
“What we’re seeing is market pricing expectations of near recessionary demand for base metals,” analyst Gayle Berry at Barclays Capital said, adding a rise in copper stocks also added to worries of weakening demand.
Copper stocks in LME warehouses rose 1,850 tonnes to 207,750 — about 90 percent above the lows for this year seen in May and accounting for just over four days of global consumption.
The dollar also weighed on metals, as it soared to a two-year high against the euro and a five-year high against sterling. Metals are priced in dollars, and a stronger dollar makes it more expensive for holders of other currencies.
“The stronger dollar is also having an influence as it reduces demand for metals from around the world,” said Ashok Shah, chief investment officer at London & Capital.
CHINA SLOWS
The prices of some metals rallied to record highs this year, and seemed immune to the credit crunch that began to take its toll on other markets last year because demand in China appeared intact, analysts say. But that seems to have changed.
“Demand from China was a big driver and now the momentum in terms of demand is coming down very quickly,” said Shah.
Growth China — the world’s biggest consumer of copper — is slowing, and data this week showed soft industrial production and a fall in GDP growth to 9 percent in the third quarter from above 10 percent.
The world’s biggest miner BHP Billiton warned Chinese demand was set to weaken, although it showed little sign of trimming output.
“China has not been immune to the global slowdown,” BHP said. “We expect volatility and uncertainty to continue in the short term.”
China is also the world’s biggest buyer of aluminium scrap, used to produce aluminium alloy, and scrap merchants were defaulting on and delaying imports of contracted scrap, traders said.
Aluminium plummeted to $1,976 per tonne, its lowest since November 2005 and was last at $2,000 versus Tuesday’s $2,080. Lead fell almost 9 percent or $120 to a low of $1,250 a tonne — the lowest since September 2006.
Zinc shed $21 to $1,144 a tonne and earlier it touched $1,118 — the lowest since December 2004 and nickel traded down at $10,150 from $10,700/10,705.
Tin lost 6.4 percent to $11,510, its weakest since January 2007, before being quoted at $11,625, down $675.
Metal Prices at 1428 GMT
Metal Last Change Pct Move End 2007 Ytd Pct
move
LME Cu 4130.00 -370.00 -8.22 6670.00 -38.08
SHFE Cu* 36070.00 -1090.00 -2.93 56880.00 -36.59
LME Alum 1993.00 -87.00 -4.18 2403.00 -17.06
SHFE Alu* 13700.00 -420.00 -2.97 18180.00 -24.64
COMEX Cu** 188.30 -12.40 -6.18 303.05 -37.87
LME Zinc 1144.00 -21.00 -1.80 2370.00 -51.73
SHFE Zinc* 9800.00 -410.00 -4.02 18950.00 -48.28
LME Nick 10050.00 -500.00 -4.74 26350.00 -61.86
LME Lead 1245.00 -125.00 -9.12 2550.00 -51.18
LME Tin 11625.00 -675.00 -5.49 16400.00 -29.12 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
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