Copper leads fall in nervous market

LONDON: Copper stayed in its ranges on Friday easing only slightly at the close with most market players showing a lack of conviction, traders said. “People are slightly more reluctant for the time being... prices will drift until the end of this quarter,” dealers said.

At the start of every new month funds tend to allocate fresh money. Also, traders were expecting more activity in October because of an expected pick-up in demand in the fourth quarter. “Until then, you will have these push-ups, push-downs... people are just wait for something to take these metals out of their ranges,” another floor trader said.

Copper closed at $7,550 a tonne from Thursday’s close at $7,560. Earlier copper hit $7,710. Sentiment was undermined by worries of a global economic slowdown and market fears that large losses at US-based hedge fund Amaranth Advisors could trigger more commodity sell-offs. “The macro side of the equation remains uncertain at best, so continued choppiness appears assured in the short term,” a Triland report said.

On the equity front, European shares lost 1% on Friday as worries about a sharper-than-anticipated landing of the US economy sparked a sell-off in cars, retailers and other stocks seen most exposed to an economic slowdown. Share losses from miners such as BHP Billiton accelerated the market’s fall as investors feared a slower global economy would reduce demand for metals.

A weaker dollar supported the metals as they are denominated in dollars, so a weaker US currency makes them cheaper for buyers in other currencies. The US currency fell to two week-lows after Thursday’s release of the September Philadelphia Federal Reserve’s survey, showing its first negative reading since ‘03.

Aluminium ended at $2,545 against $2,542. The front-end weakness seen in the aluminium curve could be explained by the collapse in alumina prices, a weaker global growth outlook and a tightening monetary policy in the US. Zinc fell $25 to $3,415, lead lost $15 at $1,362 and nickel was last quoted at $27,650/27,655 compared with $27,350/$27,400.

LME inventories fell by 48 tonnes to 6,030, of which only 3,582 or around one day of global nickel consumption is available to the market. The backwardation rose to $2,000/2,000 a tonne, up from $1,160 a week ago, reflecting the tight supply of nickel.