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Copper hits 2-wk low on grim demand outlook

Copper MCU3 for three-month delivery on the London Metal Exchange (LME) traded at $3,300 a tonne in official rings from $3,330 at the close on Monday. The metal, used in power and construction, earlier touched $3,257, its lowest since Feb. 3.

Stocks of copper in LME warehouses rose by 3,100 tonnes to 526,425 tonnes, the highest level since late 2003 and a gain of more than 50 percent since the start of the year.

“The recent (growth) data out of Japan and Germany was extremely poor,” Dan Smith, analyst at Standard Chartered, said.

“There’s a big risk aversion play underway. A lot of people are worried about the problems in the European banking sector. It’s creating weakness in the euro which is helping to knock a lot of the base metals.”

A higher U.S. currency makes metals priced in dollars more expensive for holders of other currencies.

Prices of industrial metals have plunged since the third quarter of last year as demand collapsed. Copper has lost about 60 percent since a record high of $8,940 a tonne in July, reflecting a trend across most commodities.

The Reuters-Jefferies CRB index of 19 commodity futures .CRB closed at 213.14, the lowest this year and not far from the record low of $208.55 hit last December.

The collapse in copper prices has led China to look at boosting its strategic reserves of the metal.

The State Reserves Bureau (SRB) has contracted to buy the lion’s share of a total 300,000 tonnes of imported refined copper cathode it intends to purchase for its strategic reserves. [ID:nHKG124633]

Record inventories

Aluminium MAL3 prices fell to their lowest level this year as inventories of the metal, used in transport, packaging and construction, jumped by more than 10,000 tonnes for the second day in a row to a record above 2.94 million tonnes.

Aluminium for delivery in three months traded at $1,346 from $1,348 a tonne at the close on Monday, having earlier fallen to $1,337.50 -- the lowest price since late December.

Key stainless steel ingredient nickel MNI3 was untraded in the rings, but bid at $10,050 a tonne from $10,275 at the close on Monday.

Earlier in the session it touched a low of $10,000 a tonne for the second day running. Nickel has not traded below $10,000 since Dec. 30.

“The weakness in stainless steel production makes substantial gains in nickel prices unlikely in the near-term,” BNP Paribas said in a note.

Zinc MZN3 traded at $1,119 from $1,129.

The outlook for the metal, used to galvanise steel, worsened after news that China, the world top producer of refined zinc, may consider raising the tax on imports to 5 percent from 3 percent to support domestic smelters. [ID:nHKG121605]

Lead MPB3 fell to $1,111 from $1,145 and tin MSN3 was bid at $10,850 from $11,100.

Metal Prices at 1318 GMT

MetalLastChange Pct MoveEnd 2008Ytd Pct

move

COMEX Cu147.85-5.65-3.68139.505.99

LME Alum1343.00-5.00-0.371535.00-12.51

LME Cu3310.00-20.00-0.603060.008.17

LME Lead1110.00-35.00-3.06999.0011.11

LME Nickel10010.00-265.00-2.5811700.00-14.44

LME Tin10850.00-500.00-4.4110700.001.40

LME Zinc1111.00-18.00-1.591208.00-8.03

SHFE Alu12110.00200.00+1.6811540.004.94

SHFE Cu*27390.000.00+0.0023840.0014.89