London - Copper fell to a fresh 18-month low on Tuesday, as disappointing economic data from top metals consumer China reinforced concerns over prospects for demand.
Three-month copper on the London Metal Exchange (LME) fell 1.8 percent to $6,813 a tonne at 11:23 SA time, down from a close of $6,935 a tonne on Monday.
It earlier dropped to $6,762.25 a tonne, its lowest level since October 2011.
Growth in China's vast factory sector dipped in April as new export orders shrank, a preliminary survey of factory managers showed, suggesting the world's second-largest economy still faces formidable global headwinds into the second quarter.
The flash HSBC Purchasing Managers' Index for April fell to 50.5 in April from 51.6 in March but was still stronger than February's reading of 50.4. China's official PMI is due May 1.
China is the world's top copper consumer, accounting for around 40 percent of global refined demand.
“This (data from China) contributes to the pessimistic mood among market players and is the reason for prices retreating further. We are also seeing weaker PMIs in Europe and this is also weighing on sentiment,” said Daniel Briesemann, analyst at Commerzbank.
“We do not see a short-term price recovery...but from Q3 and Q4 prices should rise due to an anticipated increase in demand as the global economy is expected to recover.”
Also weighing on sentiment was data showing Germany's private sector shrank for the first time in five months in April, suggesting Europe's largest economy may contract again after an expected recovery in the first quarter.
The metal used in power and construction is down more than 13 percent so far this year.
“It (the Chinese data) doesn't bode well for copper prices. It will have a negative impact today. Having said that, we do find when prices reach around $6,500 to $6,600, there is a floor, so we'll see increased buying from China,” said Natalie Rampolo of ANZ in Melbourne.
A rise in the dollar also put pressure on metals prices, as a strong dollar makes commodities priced in the US unit more expensive for holders of other currencies.
ZINC PRESSURED
LME zinc prices have failed to gather any upward momentum since falling to a 5-1/2-month low at $1,825 mid month.
“The problem for zinc is the same as that afflicting other base metals: current market fundamentals and macroeconomic forecasts are simply not strong enough to encourage forward buying,” broker Triland said in a note.
Zinc fell to $1,864 from a close of $1,882 on Monday.
In other metals, battery material lead dropped to $1,986.50 from $2,010 while soldering metal tin slipped to $20,700 from a last bid of
$20,795 on Monday.
Stainless-steel ingredient nickel fell to $15,170 from $15,300, while aluminium was at $1,884 from a last bid of $1,892 a tonne.
In industry news, the world's third-biggest trader in raw materials Trafigura reported a 3.2 percent rise in first-quarter net profit to $216.1 million, compared with the same quarter a year earlier, according to a filing on the Singapore Exchange. - Reuters