Zinc gains, but copper is down

MANILA, Nov 23 Copper and nickel tumbled to multi-year lows and oil extended losses on Monday as commodities bore the brunt of another selloff, reflecting growing worries over China’s economic fate and a strengthening dollar.

The London Metal Exchange’s three-month copper contract HGZ5, -2.14% was down 2.3% at $4,474 a metric ton in midmorning trade, having slipped below the key $4,500 a ton level for the first time since May 2009. The material, used to produce stainless steel, is the worst performing metal on the bourse this year, with a drop of 45 percent.

“Metals will probably stay bearish until the end of the year”, Richard Fu, the head of Asia & Pacific at Amalgamated Metal Trading Ltd., said in an e-mail, citing weak Chinese demand and a probable US interest rate rise in December.

Copper futures fell to their lowest levels in more than six years Monday, weighed down by a stronger dollar and expectations of lackluster demand.

Investors, many from China, which have unleashed waves of selling in recent weeks, took a breather and bought back some of their short positions, analyst David Wilson at Citibank said. Production cuts announced by Chinese zinc smelters last week will do little to tighten next year’s global supply-demand balance in refined metal because already-known mining cutbacks would have forced smelters to reduce production anyway. As a result, metals are more costly for buyers using other currencies. It earlier touched $8,145, the lowest since 2003.

Analysts were wary that the rebound may not last long.

Copper cable scrap, copper scrap heavy, copper wire bar and zinc moved up by a Re per kg each to Rs 371, Rs 365, Rs 399 and 140 respectively.

Lead rose 0.5 per cent to finish at $US1,594 a tonne while tin was barely changed, edging down 0.03 per cent to $US14,645. “It’s better than the third quarter, but still weak, still not enough”, he said.