LONDON (Thomson Financial) - Copper was dragged lower by weakening equities in London, as the resurgence of macroeconomic fears kept investors away from market, with inventories of the red metal continuing to rise.
Shares in London opened sharply lower, following on from large losses on Wall Street late on Friday, as fears surrounding weaker-than-expected earnings, high oil prices, and US housing figures out this week dealt a blow to trader confidence.
Stockpiles of copper at London Metal Exchange monitored warehouses increased by a further 2,150 tonnes to 151,100 tonnes. Inventories have increased by over 19,000 tonnes since the beginning of October, sparking fears that fourth-quarter demand will not be as high as first expected.
"The credit market turmoil looks like it's really going to impact on world growth and we're seeing the first signs that it's started to do so," said BNP Paribas analyst, David Thurtell. "The stock numbers certainly aren't helping either," he added.
At 10.09 am, LME copper for 3 month delivery was down 129 usd to 7,731 usd a tonne.
Prices have eased in the past week from above 8,000 usd, as interest from key consumer China was low with prices above the psychologically important level.
"They've spent the last year building up their strategic reserves of copper when prices are lower," said Thurtell at BNP. "They're not under the same pressure to buy any more when prices are at those levels."
In other metals, lead was down 45 usd at 3,620 usd a tonne, as another increase in stockpiles weighed on the market.
LME inventories increased by over 10,000 tonnes last week, and a further 3,000 tonne rise in today's report has done little to encourage investors to buy.
Lead prices have eased in the past week since hitting a series of all-time record highs on tight supplies. Analysts said the record prices had attracted further lead into warehouses, dampening but not extinguishing sentiment for now.
Prices have held firm overall, reflecting the view that the market remains tight overall, with ongoing supply disruptions in Australia and an expected increase in demand from the battery industry lending support.
Aluminium was down 20 usd at 2,531 usd a tonne, underpinned by a 3,175 tonne fall in LME inventories to 929,475 tonnes and expectations that supply demand balances in the market will tighten next year.
Tin bucked the trend to trade up 150 usd at 16,300 usd a tonne, while nickel dropped 800 usd to 31,700 usd a tonne. Meanwhile, zinc fell 86 usd to 2,884 usd a tonne. [email protected] ds1/ds1/slm
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