Copper steadied on Wednesday from four percent losses in the prior session, holding near $8,000 a tonne as twin concerns of slowing US and Chinese growth curbed demand expectations for the metal, but consumer buying cushioned losses.
Three month copper on the London Metal Exchange traded at $8,115 a tonne in official rings, up from $8,036 a tonne on Tuesday.
Copper earlier hit a trough of $8,018.00 a tonne, its lowest since Jan. 16, after it registered its biggest one-day fall since early December the previous session when many markets returned from a long Easter break.
“The worry is that China's slowdown might be slightly sharper than people expected,” said analyst David Wilson of Citi.
“But we see some reasonable consumer buying coming in at lower levels as has been the pattern through this year, as consumers who didn't lock in their purchases earlier come into the market.”
China is the world's top consumer of base metals. Trade data this week knocked confidence the world's top two economy has the muscle to power the global economy out of recession. Markets are now looking to retail sales, industrial output and first quarter gross domestic product data due on Friday.
Sentiment stabilised in European sharemarkets on Wednesday relieving some of the selling pressure on metals, however investors remain nervous about the euro zone's debt problems after a sell off in Spanish bonds and signs of dwindling global growth.
“For now it looks as though demand side fundamentals are driving prices and we would expect that to lead to further weakness in the days ahead,” FastMarkets said in a note.
“The break of support on copper bodes ill and if flagship copper heads lower now then the rest of the base metals fleet are likely to follow.”
There were no reports of damage so far from an 8.7 magnitude Indonesian earthquake that triggered a tsunami warning.
Freeport McMoRan Copper & Gold operates the Grasberg mine on Indonesia's Papua island which holds the world's largest gold reserves and is the second largest copper mine.
ALUMINIUM SURPLUS...OR DEFICIT
Aluminum producer Alcoa Inc surprised Wall Street with a first-quarter profit after a loss in the fourth quarter of 2011 as global markets improved, especially in the aerospace and automobile sectors.
It said it sees a global supply deficit this year, while raised its forecast for aerospace demand growth and saying continues to look for high-cost smelting and refining capacity for potential capacity cuts.
“We cannot agree with Alcoa's assessment that the global aluminium market will close the year with a supply-side deficit of up to 435,000 tonnes,” Commerzbank said in a research note.
“Output has after all hardly been reduced so far, despite some announcements that this would be done. And Alcoa itself actually increased production last quarter to 951,000 tons. As we see it, the market will remain over-supplied for the foreseeable future,” it said.
LME aluminium traded at $1,947 in official rings, from $2,065, and steadying from three-month lows the last session.
LME zinc stocks rose above 900,000 tonnes for the first time since 1995, latest LME data showed, with tepid demand from the galvanised steel sector failing to erode stocks that have piled up over years of global surpluses. LME zinc traded at $1,895.50 in official rings,from $1,990.
LME copper stocks, which have been rising since mid March, fell on a net basis, the latest LME data showed.
Nickel was at $17,925 from $18,175, tin was at $22,650 from $22,750 while battery material lead was at $2,019 f rom $2,015.75. - Reuters