Copper slides to six-year low below $5,000 on China angst

Copper prices slid to a six-year low below the psychological $5,000 a tonne level on Tuesday as worries about weak demand growth from top consumer China were reinforced by tumbling equity prices in Shanghai. Benchmark copper on the London Metal Exchange hit $4,983 a tonne earlier in the session. The metal used in power and construction ended down 1.5 percent at $5,035, from Monday's last bid of $5,114.
"We remain in a pretty oppressive environment, prices are likely to grind lower," said Nicholas Snowdon, analyst at Standard Chartered. "Latest demand data from China, particularly in terms of downstream activity for July, was very poor." A drop in power generation and falling property prices in July suggest a worsening outlook for copper demand growth. Chinese equities fell more than 6 percent on Tuesday, their biggest fall in three weeks, on speculation the central bank may be in no rush to ease policy further.
"With the market pretty short, and in an environment where mine supply disruptions are high, scrap supply is low, the metal seems increasingly vulnerable to an aggressive short-covering rally, though the trigger for that ... still remains elusive," ICBC Standard Bank said in a note. Traders say talk of disruption at a mine in Chile helped copper recover in afternoon trading on Tuesday. Three-month aluminium also hit a six-year low at $1,549.50. The metal used in transport and packaging fell to $1,554 from $1,567 at the close on Monday. Aluminium is under pressure from a global supply glut due to a deluge of Chinese exports.
Zinc lost 2.9 percent to $1,762 from $1,815 on Monday, lead ceded 2.2 percent to $1,691 from $1,728.5, while nickel fell 2.5 percent to $10,360 from $10,625. Tin reversed early gains and slipped 2 percent to $15,145 from Monday's last bid at $15,450. The soldering metal has been supported by falling stocks in LME-approved warehouses. At 6,285 tonnes, they are at their lowest since late 2008 and account for a fraction of global consumption estimated at about 355,000 tonnes this year.
But the real problem for tin consumers is that the amount of metal already earmarked for delivery amounts to 2,345 tonnes, leaving only 3,940 available to the market. That is why the premium for the cash contract over the three-month tin future has surged to $540 a tonne from $50 a tonne on Friday, traders said.