–> Copper prices fell on Friday, reversing gains from the previous session, pressured by a stronger dollar and growing concerns about the outlook for economic growth. Three-month London Metal Exchange (LME) copper was last bid at $6,640 a tonne, down 1.19 percent and not far from a five-month low of $6,600 a tonne hit on October 2. It is trading 9 percent lower in the year to date.
Global shares tumbled to six-month lows, hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil also face headwinds. “When there is fear in the market, it is difficult to find buyers and the price starts sliding, and this is what we are experiencing for copper,” said Naeem Aslam, chief market analyst at Ava Trade.
Referring to caution about the approaching end of US monetary stimulus, Aslam added: “Taper tantrum, fragile European and Chinese growth and strength in the US dollar are the major reasons for the weak demand for copper.” The US Federal Reserve is later this month set to wind down the asset purchase programme that has boosted commodity markets over the past two years.
Adding to liquidity concerns, two top officials at the Fed said the central bank would probably start raising interest rates around the middle of next year, although both said the exact timing will depend on the economy. Data on Thursday showed German exports plunged in August by the largest amount since the height of the financial crisis, and leading institutes slashed their forecasts for growth.
The dollar inched higher against a basket of currencies. Also of concern was stuttering demand growth in top consumer China, which is suffering from a property-led slowdown and which is due to announce a string of trade figures next week. “It’s been a pretty tumultuous week,” said analyst Tim Radford at Sydney-based adviser Rivkin. “A lot of participants are pretty fearful at the moment surrounding concerns over global growth. Plus if (dollar) … strength continues, it will continue to place downside pressure on metals and cap gains.”
Analysts in a Reuters poll said softer domestic demand probably pulled down growth in China’s imports, investment and retail sales to multi-month or multi-year lows in September, raising questions about whether policymakers should do more to fight the economic slowdown.
Trade data is due on Monday. In other metals, aluminium ended down 1.03 percent to $1,930 a tonne, while zinc closed down 0.90 percent to $2,314 a tonne and nickel was last bid at $16,350 a tonne, down 1.95 percent. Lead was last bid at $2,062 a tonne, down 1.25 percent, and tin ended flat at $20,200 a tonne, having earlier hit a 14-month low at $19,961 a tonne.Copyright Reuters, 2014