Bundles of copper cathode sheets ready to be loaded and sent out to buyers are seen at the plant of Uralelektromed Joint Stock Company.

Bundles of copper cathode sheets ready to be loaded and sent out to buyers are seen at the plant of Uralelektromed Joint Stock Company. (Reuters)

Copper Prices Slide to Lowest in Nearly Seven Years

Markets FOXBusiness

Copper prices tumbled on Thursday, hitting their lowest in nearly seven years, as plunging China equities highlighted the country's economic problems and reinforced concern about demand for industrial metals.

Continue Reading Below

Benchmark copper on the London Metal Exchange was down 2.9 percent at $4,486 a tonne at 1505 GMT. The metal, used in power and construction, had earlier touched $4,430, its lowest since May 2009.

China's stock markets were suspended for the day less than half an hour after opening as a new circuit-breaking mechanism was tripped for a second time this week. Shanghai stocks slid 7.3 percent to trigger the halt, a repeat of Monday's losses.

"Chinese equities, some of the economic data this week have spooked the market. China is the dominant consumer of pretty much every commodity," said Investec analyst Marc Elliot.

Data published this week showed China's manufacturing sector shrank for the 10th month running in December, while activity in services fell to a 17-month low.

China's central bank allowed the yuan to fall to its lowest level against the dollar since March 2011, a sign analysts said was an acknowledgement of weak growth.

Continue Reading Below

"The Chinese stock market still has much more room to fall considering that for all the weakness we saw in the Chinese economy last year, the general Shanghai stock market was still up 9 percent last year," INTL FCStone's Edward Meir said in a note.

"Another relatively safe bet is further yuan depreciation."

Some support for copper could come from China's state stockpiling agency, the State Reserve Bureau, which is expected to start buying domestic copper supply this month after local smelters urged it to intervene, industry sources said.

"The market is waiting to see if it actually happens and how much they will do," a metals trader said. "We saw another leg of selling after New York came in.

"We have to see if SRB actually buys," a copper trader said.

Three-month aluminum was down 0.7 percent at $1,464 a tonne from an earlier one-month low at $1,453.

An oversupply of the metal used in transport and packaging has contributed to downward pressure, which traders expect to again test the 6-1/2-year low of $1,432.50.

A slump in oil prices to their lowest since 2004 also undermined sentiment, as did a World Bank report highlighting the weak performance of major emerging economies.

Zinc fell 3.3 percent to $1,495 a tonne, lead slipped 2.5 percent to $1,637, tin was down 0.3 percent at $13,760 and nickel lost 3.1 percent to $8,330.

What do you think?

Click the button below to comment on this article.