Copper hit a 7-week low on Monday as the euro fell and
as concern about global growth, heightened by disappointing corporate earnings,
dented risk appetite and overshadowed solid U.S. third quarter economic growth.
Activity was expected to be thin as the massive hurricane Sandy closed in on
the U.S. East Coast, causing regulators to shut U.S. stock markets, possibly
until Tuesday, although Comex futures, such as those in copper, will trade
electronically.
Benchmark three-month copper on the London Metal Exchange traded
down 1.36 percent at $7,710 a tonne in official midday rings, having earlier
touched $7,698, its lowest since Sept. 7. Tin and aluminium also
touched their lowest since early September, while nickel and zinc
reached their lowest since mid-to-late August.
The euro was down slightly versus the dollar, hurt by uncertainty over
whether Greece can agree to a deal on austerity and with no sign of when Spain
might request aid.
A weaker euro makes dollar-priced metals costlier for European investors.
“It's the reality of a bad macro-economic backdrop that's weighing on
sentiment, some of the latest signs of which come from corporate earnings. We
think all base metals can fall over the next six months and we expect them to,”
said Ross Strachan, analyst at Capital Economics.
In the U.S. meanwhile, data showed U.S. consumer spending rose solidly in
September, but against that, manufacturing activity in the Chicago Midwest fell
in September versus August.
U.S. economic growth picked up slightly more than expected in the third
quarter, data showed on Friday, though global giants Apple and Amazon
, European car maker Renault and electronics group Ericsson
all posted results that fell short of expectations.
The U.S. election takes place on Nov. 6 and the first stage of China's
leadership transition on Nov. 8, all of which is keeping investors cautious.
“Given (U.S. President Barack) Obama's regulatory stances, an Obama victory
would likely be interpreted bearishly by financial markets, and could have a
modestly negative impact on job growth and corporate investment in Q4 2012,”
said Jason Schenker at Prestige Economics.
Helping limit losses in copper though, weekend data from top consumer China
showed industrial profits rose 7.8 percent in September from a year earlier to
464.3 billion yuan ($74 billion), up from a 6.2 percent drop in August.
Copper prices fell 2.4 percent last week in their largest weekly fall in
four months, having been up nearly 11 percent for the year at one point in
September. Copper is currently up 2.5 percent for the year.
Figures that could impact metals prices later this week include China's
official purchasing managers index for September on Thursday and U.S. jobs
figures for October on Friday, which analysts say could influence the
presidential election outcome.
SPECULATORS EXIT
For now, speculators continue to exit long copper positions with signs of
fresh short positions emerging in China.
Bullish bets on U.S. commodities by hedge funds and other big speculators
have fallen to a near 2-1/2 month low, trade data showed on Friday, as oil and
gold saw heavy selling for a second straight week.
Shanghai Futures Exchange (SHFE) figures paint a similar picture, notes
Standard Bank, as open interest last week gained 6.9 percent while prices for
the January 2013 contract fell by just over 2 percent.
“This suggests bears are in the ascendancy, in China at least, even amid a
market often dominated by a large day-trading population,” it said in a note.
In other metals traded, battery material lead fell 0.45 percent to
$2,006 a tonne in midday rings, with LME data showing a large 16,425 tonne rise
in stocks, all concentrated in the backlogged port of Antwerp.
Total lead stocks now stand at 326,675, their highest since February, though
most of the metal is unavailable, tied up in backlogged warehouse locations or
held by investors as collateral for financing deals.
Stainless-steel ingredient nickel fell 0.50 percent in rings to
$15,925 a tonne, having earlier touched its lowest since mid-August at $15,758.
In industry news, world No. 3 nickel producer BHP Billiton
has shed jobs at its Australian Nickel West division to cut costs amid a weak
global market for the metal, the company said on Friday.
Soldering metal tin was flat at $19,800 a tonne, having earlier
touched $19,511, its lowest since early September; zinc fell 0.76
percent to $1,820 a tonne, having earlier touched its lowest since late August
at $1,816.
Packaging metal aluminium fell 1.04 percent to $1,902 a tonne,
having earlier touched its lowest since early September at $1,897 a tonne.
-Reuters