Nickel has slumped to its lowest price in nearly 11 months and other industrial metals slid as speculators unleashed more selling due to worries about higher US interest rates and slowing Chinese economic growth.
Copper suffered its biggest weekly drop since mid-August as investors shunned riskier assets such as commodities and shares.
Prices took another hit on Friday after the US central bank confirmed a gradual rise in interest rates while data showed weak Chinese car sales.
‘Base metals are on the defensive … and that’s not surprising because the dollar is very strong, we’ve seen some weakness on stock markets overnight and the Chinese currency is a bit weaker,’ Robin Bhar, head of metals research at Societe Generale in London, said earlier in the day.
The stronger US currency makes dollar-denominated metals more expensive for buyers paying in other currencies.
‘There’s still negative macro sentiment, which seems to be winning the day, and for the moment investors seem happy to either sit on the sidelines or hold short positions,’ Bhar added.
While supply-demand fundamentals had supported copper prices, macroeconomic concerns such as US-China trade tensions have been capping gains in the metal used in power and construction.
Copper hit a four and a half year high in June.
Three-month nickel on the London Metal Exchange closed down 2.7 per cent at $US11,460 a tonne, its weakest since December 15 last year.
Chart indicators show nickel has more downside, Stephanie Aymes, head of technical analysis at Societe Generale, said in a note.
‘Nickel could halt temporarily its down move once the next objective at $US11,040 is met.’
Three-month LME copper fell 1.6 per cent to finish at $US6,056 a tonne, the lowest in a week, and chalked up its biggest weekly loss since the week to August 17 with a decline of over 3.0 per cent.
Nickel and zinc, mainly used in the steel industry, were pressured after China’s steel futures edged lower on Friday and posted their second weekly drop amid signs that steel output in the world’s top producer would remain high.
LME benchmark zinc erased losses and ended barely changed, up 0.02 per cent at $US2,523 a tonne.
The premium of cash zinc over the three-month contract surged to $US65 a tonne, the highest since October last year, indicating nearby shortages of physical refined metal.
LME lead, which slipped 1.4 per cent to close at $US1,977 a tonne, exhibits the largest speculative short position of the LME complex, according to Marex Spectron’s estimates based on Monday’s close, a note said.
Aluminium dropped 1.8 per cent to end at $US1,955 while tin lost 0.9 per cent to $US19,150.