London - Copper hit its lowest in more than a month on Tuesday, dragged down by worries over a slower pace of growth in top metals consumer China and signs that central banks could soon rein in the loose monetary policy that has fed global market rallies.
Data at the weekend from China, the world's biggest consumer of copper, showed unexpected weakness in May trade and domestic activity struggling to pick up.
Copper's fall mirrored other markets, as concerns over China added to worries that central banks could soon start tightening the ultra-loose monetary policies that have fueled rapid gains in asset prices this year.
World shares fell and yields on riskier European debt rose on Tuesday after the Bank of Japan's decision not to follow up its $1.4 trillion stimulus programme announced in April.
Three-month copper on the London Metal Exchange, untraded in official rings, was bid at $7,070 a tonne, having earlier touched its lowest since early May at $7,055. It closed at $7,230 on Monday and is down 6 percent so far this quarter.
“There's really no incentive for anybody to look to buy side at the moment. In the short term, the weak Chinese data was clearly a negative,” said Wiktor Bielski, an analyst at VTB Capital.
However, he added: “The outlook is not as bad as headlines suggest. We've seen a substantial drawdown in bonded stocks in China. There's the Grasberg closure, there's Kennecott, and the Chinese are struggling to get hold of scrap. China is going to have to import more.”
Operations at the world's No. 2 copper mine in Indonesia, run by Freeport McMoRan Copper and Gold Inc, have been shut since an accident last month killed 28 workers.
Also India's top copper smelter is preparing to reopen, potentially adding to a short-term squeeze on concentrate supply. The smelter will only operate until the second week of July, however.
“A lot of the big production increases over the next few years are now in jeopardy because of financial pressure on miners, or environmental problems for example,” said Matt Fusarelli of Sydney-based consultancy AME Group.
The median of analysts polled by Reuters in April forecast the copper market to be in a 95,800 tonne surplus this year, narrower than a surplus of 127,000 predicted in a poll in January.
Global miner Rio Tinto plans to start exporting copper from the $6.2-billion Oyu Tolgoi mine in Mongolia on Friday.
Three-month lead was $2,139 in rings from $2,164 at the close, zinc was $1,869 from $1,903.50, aluminium was $1,887.50 from $1,940, and tin was $20,600 from $21,050.
Nickel, untraded in rings, was bid at $14,550 from a close of $15,045. - Reuters