New York, London — Copper prices closed down Friday, falling under the weight of lingering concerns about the speed and strength of any global economic recovery and its potential impact on demand growth.
Tin fell more than 5 per cent for a third day running to hit a 10-week low of $11,900 a tonne on concerns surrounding backwardation.
Copper for September delivery on the New York Mercantile Exchange's Comex division shed 2.60 cents (U.S.) to settle at $2.2115 a pound.
On the London Metal Exchange (LME), benchmark copper ended down $30 at $4,860 tonne. The metal used in power and construction has lost 9.4 per cent since hitting an eight-month high of $5,388 on June 11.
“There is a bit of concern over the economic outlook at the moment and that maybe the sense of pick-up had been over-egged in recent weeks,” said David Wilson, director of metals research at Société Générale.
“The wind seems to be coming out of the sails of base metals based on that,” he said, adding that he expected copper prices to be “sideways to slightly softer with a lot of volatility.”
Economic signals remain mixed. Latest data showed Japanese wholesale prices fell at a record pace in June, as the world's No. 2 economy still struggled to find its footing.
A survey showed U.S. consumer sentiment soured in early July, slipping to its weakest since March as concerns about an extended economic downturn remained.
“I think the market has already priced in a recovery to a certain extent, and if we don't start seeing some concrete signs that that is talking place, the market is going to correct further from here,” said Michael Gross, futures analyst with Optionsellers.com in Tampa, Fla.
Additional pressure was seen from the dollar, which rose amid fears of weak U.S. corporate profits and fading hopes for a global economic recovery. A stronger dollar makes dollar-priced metals more expensive for holders of other currencies.
Bullish trade statistics from China, the world's top metals consumer, failed to provide an impetus to push prices higher.
China's imports of unwrought copper and semi-finished copper products rose 12.6 per cent to hit a record in June for the fifth straight month.
Analysts expect further price weakness as a quieter trading season looms, with Chinese buying quashed by higher LME copper prices narrowing the spread between LME and Shanghai exchange prices.
But some expect Chinese demand to recover later this year.
“Demand from China is probably going to be there,” said Fairfax analyst Marc Elliott, looking into late 2009 and early 2010.
Aluminum, used in transport and packaging, closed at $1,572 from $1,574. Nickel closed at $14,490 from $14,900.
Traders were watching Brazilian company Vale Inco's Sudbury, Ont., nickel-copper operations, where wage negotiations broke off on Monday, less than a week before a strike deadline.
Catherine Virga, senior base metals analyst with CPM Group in New York, believed the potential strike threat has been priced into the market.
“If they do go on strike, perhaps we can test or take out a little bit of the most recent high, but I really do think it is already factored into prices,” she said.
Tin closed at $11,950 from $12,700.
Prices have fallen over the past three days, partly because the premium for material in September against the December contract – indicating a potential supply shortage – has nearly halved to about $450 a tonne.
Traders said losses were also due the worries that the LME would take action to curb long tin positions reflected in that premium.
Zinc closed at $1,493 from $1,530 and battery material lead was untraded at the close but was last bid at $1,595 from $1,625.
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