Copper hits near 4-year bottom over China slowdown fears
Copper prices hit Tuesday their lowest in nearly four years on the London Metals Exchange over fears of a slowdown in growth in China, the world's top consumer of industrial metals.
The price of a tonne of copper hit $6,469.75 at 1700 GMT, its lowest level since July 2010.
"A number of recent developments have weighed both on copper and iron ore prices," said commodities economist Caroline Bain at London-based Capital Economics.
"First, China's industrial activity data were generally weak in the first two months of the year."
China's manufacturing activity contracted at its worst rate in seven months in February, according to a survey by British banking giant HSBC.
Chinese officials have also said recently growth in the world's second-largest economy could slow to 7.2 percent this year from the 7.7 percent rate registered the past two years.
With China accounting for between 40 and 60 percent of global demand of industrial metals, their prices are highly sensitive to a slowdown in the Chinese economy.
Bain also noted that the attractiveness for Chinese companies of trade-finance deals linked to commodities has also waned.
"Lower import demand later in the year appears inevitable given the high level of stocks and the likelihood that manufacturing activity will not pick up significantly," said Bain.
Analysts at Triland Metals brokerage said the default on interest payments last Friday by Shanghai-based Chaori Solar Energy Science & Technology Co. had also apparently triggered a selloff of metals positions held as collateral against loans.
Data released at the weekend showing an 18.1 percent drop in exports in February compared to the same month last year, which resulted in an unexpected trade deficit of $22.98 billion in February, also weighed on sentiment, said Triland Metals analysts.
© 2014 AFP