Copper fell to a three-month low on Tuesday as investors cut risk on concerns about a cooling Chinese economy and slowing jobs growth in the US, the world's two largest copper consumers, while International Monetary Fund said it saw lower commodity prices ahead. Three-month copper on the London Metal Exchange shed 3.9 percent to finish at $8,036 a tonne, having earlier hit its lowest on January 16 at $8,024.85.
Copper had last week finished flat ahead of Easter holiday closures, and a break below its range of $8,200 to $8,700 after more than two months may herald further chart-based losses ahead, traders and analysts said. "US job numbers on Friday were disappointing. China and the US combined account for more than half of global copper consumption, so it's uppermost in a lot of investors' minds that the two engines of growth might be slowing," said analyst Robin Bhar of Societe Generale.
Wall Street stocks extended their recent losing streak on Tuesday, stung by worries about slowing US job growth, while the euro fell on nagging concerns about Europe's fiscal problems. Signs of a cooling US recovery after Friday's release of disappointing data on jobs creation in March, and the festering debt crisis in the euro zone fuelled the view of tepid global growth, stoking safety bids for US and German government debt.
Adding to the bearish tone, the IMF said on Tuesday commodity exporters should brace for lower prices given weak global economic activity. "It's yet more confirmation that commodity prices generally are likely to struggle while growth is as anaemic as it appears to be at the moment, and there's no real hope in the next few months that momentum will speed up," Bhar added.
China released March trade data on Tuesday, returning to an export-led trade surplus while imports grew less than expected. Its imports of copper fell 4.6 percent to 462,182 tonnes in March from 484,569 tonnes in the previous month, data from the General Administration of Customs showed, but they were still the fourth-highest ever level. "The copper imports were pretty solid numbers in the scheme of things," said analyst Dan Smith of Standard Chartered.
The data showed the use of copper for financing purposes by traders in China's cash-strapped market was still popular, but suggested weak end-use demand may be feeding through to imports, analysts said, keeping a lid on prices. "In our view it would be premature to worry about a cooling of growth dynamism in China on the basis of this data, since copper imports were still more than 50 percent higher than the previous year's figures," Commerzbank analysts said in a note to clients.
"Nonetheless, we do anticipate that dynamism will continue to decrease over the next few months, which may prevent any significant rise in prices," the bank added. The numbers also came on the heels of data on Monday showing that China's annual inflation rate jumped more than expected in March to 3.6 percent as food prices remained volatile.
A trend reversal in LME copper stocks, which have been building since mid March, has eroded confidence in demand, and support for prices, Edward Meir, commodity analyst with INTL FCStone, said. "If you look at the whole array of factors, there isn't much to cheer about. If you start with LME stocks, they're up 10,000 tonnes in the past few days. Maybe the decline we've seen is coming to an end, and that has been providing a lot of support over the past few months," he said.
LME stocks climbed by 3,625 tonnes, latest LME data showed, denting a downtrend in place since early October. Meanwhile, copper's downside break of chart support around the $8,150 mark suggests prices may drop back to January lows around $7,500 a tonne if a second consecutive close below the watermark is registered on Wednesday, Meir added.
In other base metals, aluminium and lead both fell to their lowest since early January, caught in copper's downdraft. Aluminium closed down 2.1 percent at $2,068.50, while lead shed 2 percent to finish at $2,018 a tonne. Tin ended at $22,750, losing 1.8 percent, nickel fell one percent to $18,175. Zinc finished down 0.65 percent at $1,990. Refined tin shipments from Indonesia, the world's top exporter, fell 4.9 percent in March to 8,607.71 tonnes from 9,051.46 tonnes a year earlier, a trade ministry official said on Tuesday.