Copper prices hit three and a half month lows overnight as worries about economic and demand growth in top consumer China were reinforced by manufacturing data.
Benchmark copper on the London Metal Exchange ended 2.1 per cent down at $US5,842 a tonne, having touched its lowest since September 11 at $US5,831.
Prices of the metal used in power and construction fell 18 per cent last year.
China’s factory activity contracted for the first time in 19 months in December as domestic and export orders weakened further, a private survey showed.
‘Chinese manufacturing data confirmed the trend of a slowdown and is weighing on metals,’ one copper trader said.
‘Fund selling after Europe opened pushed copper to September lows.’
The Caixin/Markit Manufacturing Purchasing Managers’ Index for December fell to 49.7 from 50.2 in November, marking the first contraction since May 2017.
Manufacturing is a key source of jobs in China’s economy.
China accounts for half of global copper consumption estimated at about 24 million tonnes this year.
One major reason behind slowing growth is the US-China trade dispute.
Last month the two countries agreed a 90-day ceasefire to try to end a dispute in which the two nations have imposed increasingly severe tariffs on each others’ goods.
‘While (China) authorities are loosening policy, we only expect the economy to stabilise by mid-year, which will be a factor weighing on all commodity prices but particularly the industrial metals,’ Capital Economics said in a note.
RUSAL: The LME confirmed on Monday that it would lift the suspension on aluminium produced by Russia’s Rusal if U.S. sanctions are lifted, saying that a consultation with users had not raised any objections to the plan.
The aluminium price closed 2.7 per cent down at $US1,797 a tonne after hitting a one-year low at $US1,786 on concern about oversupply despite Chinese producers’ plans to cut capacity.
Worries about a tight LME aluminium market because of low stocks and one company holding 50-79 per cent of warrants has created a premium for the cash contract over the three-month contract of about $US9 a tonne.
It touched $US16 on Monday, the highest level since July.
The premium has attracted some aluminium to the LME system but stocks, at 1.27 million tonnes, are still 10 per cent below those last April and a fraction of global demand estimated at about 67 million tonnes this year.
Zinc fell 2.4 per cent to $US2,409, lead lost 3.3 per cent to $US1,955, tin was little changed at $US19,480 and nickel gained 1.7 per cent to $10,870 a tonne.