London 03/10/2011 - Copper lost more than three percent in early LME trading on Monday, extending losses from the previous session, while debt problems in peripheral eurozone nations continued to sap investor confidence in base metals and other risky assets.
Traders have barely caught their breath after a ruthless September sell-off that saw double-digit losses across many base metals. But October started with more of the same - copper hit an intraday low of $6,635 earlier in the session, its cheapest in 14 months, while the rest of the complex also struggled.
“We’re definitely in a bear market now,” one metals trader said. “I don’t think prices appear oversold at all at these levels.”
All base metals apart from aluminium are down more than 20 percent in the year to date, while copper has fallen 25 percent in September alone, as global economic worries have gradually mushroomed into a panic.
Greece is teetering on the edge of a default and there are signs that Western economies may be headed back into recession.
Sentiment worsened on Monday on fears that Greece will miss a deficit target set in July as part of a massive bailout package, according to draft budget figures released over the weekend, raising the likelihood of a default.
Its deficit this year is likely be 8.5 percent of GDP, above the 7.6-percent target agreed with a "troika" of lenders - the EU, the European Central Bank and the IMF.
Today marks the first day of LME Week, the yearly industry event in London, which attracts thousands of the top metals and mining professionals worldwide. Participants will discuss themes that typically influence market sentiment for months to come, and the current downturn is expected to dominate conversation.
US data releases scheduled for Monday include September ISM Manufacturing PMI, August construction spending and September total vehicle sales. On Friday, traders will be watching for the all-important non-farm payrolls numbers for September.
“Consensus expects these indicators to confirm the economic slowdown once more,” Credit Suisse said. "This will put the already weak sentiment to another test. The near-term outlook for industrial metals prices remains challenging."
COPEPR 'CLOSE' TO FINDING A BOTTOM
Copper could bottom out around $6,600 in the fourth quarter of 2011 once Chinese buyers return to the market to start to replenish their stocks, according to a senior Deutsche Bank analyst, RBC Capital Markets reported.
Copper recently traded at $6,725 per tonne, down $293. Stocks rose a net 1,250 tonnes to 474,950 tonnes, while cancelled warrants rose 550 tonnes to 32,575 tonnes. Around 9,500 lots had traded as of 11:00 London time.
Supply issues continue to affect the red metal - the worker’s union at the Cerro Verde mine in Peru has announced the start of an indefinite strike at the site.
Aluminium at $2,161 was down $4 but up from an intraday low of $2,130. Inventories declined 3,575 tonnes to 4,563,750 tonnes, while cancelled warrants fell 3,325 tonnes to 251,850 tonnes
Nickel traded at $17,899, up $299. Stocks climbed 336 tonnes to 97,074 tonnes, while cancelled warrants fell by the same amount to 8,094 tonnes.
Zinc fell $8 to trade recently at $1,852. Inventories fell 2,500 tonnes to 818,825 tonnes and cancelled warrants rose by 850 tonnes.
Lead traded at $1,950, down $35. Stocks increased by 525 tonnes to 374,125, while cancelled warrants fell by 800 tonnes to 8,175.
Tin at $20,000 was down $350. Stocks rose 525 tonnes to 374,125 tonnes, while cancelled warrants fell 800 tonnes to 8,175 tonnes.
Steel billet was indicated at $540/565. In the minors, cobalt was indicated at $32,400/33,500 per tonne, while molybdenum was offered but not bid.