Copper fell on Tuesday as prices remained close to 4-1/2 year lows hit in the previous session due to dollar strength, plunging oil prices and concerns on demand from top consumer China as the country moves to raise output.
Three-month copper on the London Metal Exchange
(LME) fell 1.8 percent to close at $6,145 a tonne, having hit its lowest since June 2010 on Monday at $6,095.50.
Aluminum also saw hefty falls taking the market back to its lowest since May last year.
The dollar traded near a nine-year high against the euro as speculation over a possible Greek exit from the euro zone further sapped confidence in the single currency. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies. [FRX/]
A further drop in oil to fresh 5-1/2 year lows after a five percent plunge in the previous session also fueled a pullback in risk appetite. [O/R]
“It looks as if the rout in oil has unsettled the other commodities, particularly metals. I suspect there’s been selling of commodity baskets as there is re-rating coming up,” Societe Generale analyst Robin Bhar said, adding that prices could fall further.
Ava Trade chief market analyst Naeem Aslam also connected copper’s slide to oil, which translated as a sign of lower global economic growth.
He said, however, that projected infrastructure spending in top consumer China could help support copper longer term.
There was also continued concern that a new export tax rebate for some copper products introduced by Beijing, a move expected to increase copper product shipments as much as tenfold, would contribute to an oversupply this year.
The Ministry of Finance said China had put in place an export tax rebate of 9 percent for copper bars, rods and profiles at the start of 2015, while increasing the export tax rebate for copper foils to 17 percent from 13 percent.
“That only suggests they will gear up to produce more semi-manufactured copper products, along the lines of what they’ve already done in aluminum ,” Bhar said.
Aluminum fell 1.6 percent to close at $1,789.50 a tonne, having earlier hit is lowest since May 2014 at $1,785; zinc fell 1.4 percent to close at $2,175 and nickel gained 0.4 percent to close at $15,260.
Tin rose 1.4 percent to close at $19,775, while lead closed flat at $1,845.
Zhejiang Yaang Pipe Industry Co., Limited