Copper hits eight-month low

Copper closed at its lowest in 8 months on Wednesday as investors sold risky assets amid speculation France's credit rating may be at risk and in response to growing concerns about the demand outlook for metals in a slowing economy. Sentiment turned negative as equity markets slumped and gold soared on fears France could lose its triple-A credit rating, sending French banks tumbling, even as all three major ratings agencies confirmed the country's top-notch rating.
Three-month copper on the London Metal Exchange closed at its lowest level since December, 2010 at $8,595 a tonne, down 1.5 percent from Tuesday's close of $8,730. It had earlier hit a high of $9,005 following a pledge on Tuesday by the US Federal Reserve to keep interest rates low.
The metal used in power and construction, which fell for the sixth consecutive session, has lost nearly 5 percent so far this week, and is down 10 percent in the year-to-date. Volatility pushed the number of trades on the LME to a daily record of over 100,000 on Monday as volumes soared.
Although the Fed's promise to keep rates at extraordinary low levels through to mid-2013 had helped boost sentiment earlier in the day, analysts saw the pledge as providing only a short-term boost to base metals as the focus returns to the health of the economy and its implications on metals demand.
"The Fed's plan to keep rates low for such a long time also tells you that the Fed thinks the economy will be very sluggish for a long time," said Edward Meir, an analyst at MF Global. Data from China helped limit falls in prices. The country's imports of unwrought copper and semi-finished copper products rose 9.5 percent on the month to a six-month high in July as buyers took advantage of lower prices since the metal rose to a record high $10,190 per tonne in February.
"Most of these imports in July would have been bought during late May, early June when the price was well off the February-April levels," David Thurtell, an analyst at Citigroup, said. China's overall exports also hit a record high last month as shipments to Europe and the United States proved surprisingly buoyant, easing concerns that debt problems abroad may hold back the world's No 2 economy.
Aluminium inventories in the Dutch port of Vlissingen jumped by 195,850 tonnes, in the biggest single-day inflow into LME warehouses, data showed n Wednesday. Last month, aluminium stocks jumped by 100,000 tonnes in the Dutch port as traders speculated that Glencore had registered material in warehouses there and that more may follow.
LME three-month aluminium fell to $2,396 tonne from a close of $2,407. "A large stock increase (in aluminium) has put the market on the back foot. It's highly likely this material has been around for a while and is just becoming more visible due to a financing requirement," RBC analysts said in a note.
Tin rose over 5 percent to $23,995 a tonne, before dropping to $22,745 from Tuesday's close of $22,775. At the start of the year, tin's tight fundamentals suggested it would be a star performer this year, attracting speculative inflow. Zinc closed flat at $2,100 a tonne, while nickel fell to $20,975 from $21,205. Lead climbed to $2,275 a tonne from Tuesday's close of $2,254.