Copper fell to its lowest level in a month on Thursday as slower economic growth fuelled worries over the outlook for metals consumption and as the dollar rose, but a strike at the world's largest mine raised supply fears and limited losses.
Benchmark copper on the London Metal Exchange fell to $9,345.25 a tonne, its lowest since July 1. It closed at $9,355 a tonne, down from $9,530 at the close on Wednesday. "Concerns about debt and growth are clearly troubling metals, which depend on increasing demand. It will take some time for those concerns to go away," said Robin Bhar, an analyst at Credit Agricole.
A string of weak economic data from the United States and China showed the health of the global economy is at risk and this may dent demand for industrial metals. Investors also feared a deepening debt crisis in Europe could hit appetite for commodities perceived as riskier, such as industrial metals. European Central Bank President Jean-Claude Trichet said the bank would offer a round of six-month liquidity to banks in response to a worsening debt crisis in the eurozone. The bank held interest rates at 1.5 percent.
Tin hit its lowest level since the end of June at $25,450 a tonne and ended at $25,505 from a $26,300 at Wednesday's close "The whole global macro picture is slowing down; the US and Chinese figures were pretty weak ... it's a worrying time for markets and that reflects on base metals," said Standard Chartered analyst Daniel Smith.
Continued strike action at the world's top copper mine and contagion fears, however, were lending support. Chile's Escondida will vote on Thursday on a bonus offer aimed at ending a 14-day strike, which has raised the spectre of more unrest at other mines. "Copper ore grades are falling and mine strikes are supporting copper... all this tightens up the market," Smith said. The world's top copper miner, Codelco, sees some risk that strike action could spread in Chile.
The union representing workers at Freeport McMoran Copper & Gold's giant Indonesian mine, Grasberg, could also strike again if its demands of a 20-fold pay rise are not met. Also supporting some base metals is improving buying interest from top consumer China. "Demand in China is pretty good on the whole," Smith said. Aluminium was untraded at the close, but bid at $2,476 a tonne from $2,524 on Wednesday. Highlighting bullish demand for the metal, used in packaging and transport, aluminium premiums remained at or close to all-time record levels in all major regional markets, analysts said. Zinc, used to galvanise steel, ended at $2,330 from $2,377, while battery material lead fell to $2,490 from $2,522. Nickel closed at $23,650 from $23,805.