Copper slipped on Wednesday as market sentiment soured following pessimistic comments from a German official about the chances that an EU summit on Friday would solve a eurozone debt crisis that is crippling economic growth and denting metals demand.
Benchmark copper on the London Metal Exchange closed at $7,820 a tonne, down from Tuesday's close of $7,835. Copper was up about 1 percent earlier in the session as investors hoped that EU leaders, who will meet on December 9, will take tougher measures to resolve the debt crisis.
There were also expectations that the European Central Bank (ECB) will announce a rate cut on Thursday, which would boost liquidity in the banking sector and calm markets. But a German official said Berlin was increasingly pessimistic about the chances of a deal at the summit, because some governments did not seem to grasp the gravity of the situation.
The comment pulled the euro lower against the dollar, putting further pressure on metals prices. A stronger US currency makes dollar-priced commodities such as metals costlier for holders of other currencies. "This is a very, very difficult path that the European politicians are trying to walk down, and we're a long way away from the end point," said Natixis analyst Nic Brown.
China's annual rate of export growth slowed in November versus October, Vice Commerce Minister Chong Quan said, confirming market expectations that deteriorating external conditions are dragging on the world's No 2 economy. Inventories of copper in Asian warehouses monitored by the London Metal Exchange and in warehouses monitored by the Shanghai Futures Exchange have been falling in the last few months, but the pace of withdrawals has slowed recently, pointing to a decline in spot demand from Asia.
Chinese importers cut purchases of copper in bonded warehouses in Shanghai this week because of weaker domestic demand, caution over prices and slower processing by local customs offices, traders said on Wednesday. Tin stocks, on the other hand, continued to fall significantly, pointing to increasing demand for the metal used for soldering.
Inventories of tin in LME-monitored warehouses fell below 12,000 tonnes, their lowest since April 2009 and almost 50 percent down from last August. "We attended ITRI's inaugural Investing In Tin seminar ... Presentations on the market outlook highlighted that supply is still constrained," Macquarie said in a note.
"In the short term, more supply can come only from Indonesia, and this will be subject to higher prices than prevail today in what is a deficit market." Tin closed at $20,500, it was untraded at the close on Tuesday but bid at $20,300, while zinc, ended at $2,027 down from a close of $2,045. Battery material lead closed at $2,148 from $2,125 and aluminium at $2,078 from $2,113. Nickel ended at $18,050, down from Tuesday's close of $18,445.
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