Copper extends fall on China trade slump, nickel plunges

LONDON: Copper slid on Tuesday, on track for its biggest daily loss in four months, as weak trade numbers from top consumer China led funds to reverse their bets on higher prices.
Benchmark copper on the London Metal Exchange was down 2.4 percent at $4,878 a ton at 1546 GMT. Last week prices hit a four-month high of $5,059 a ton.
Traders said losses accelerated after New York opened as investors took their cue from an earlier drop. The rout was seen in mining stocks, which took the STOXX Europe 600 Basic Resources index down 9.6 percent.
“This is a market that is rapidly outpacing fundamentals,” said Barclays commodities analyst Dane Davis. “The pullback is a recognition of the fact that in China there is a lot of rhetoric about a stimulus package.”
China’s February trade performance was far worse than expected, with exports tumbling by the most in more than six years, days after leaders sought to reassure investors over the outlook for the world’s second-largest economy.
The country’s copper imports were down 4.5 percent month on month at 420,000 tons, although they were up sharply from the same month last year.
Investec analysts cautioned in a note that the year-on-year figure was flattered by a particularly weak comparison as buyers held back as much as possible.
Three-month aluminum fell 0.3 percent to $1,588, tin dropped 1.1 percent to $16,815 and zinc slid 3.8 percent to $1,787.
Nickel extended its earlier fall, sliding 5.1 percent to $8,880, handing back of its recent gains due to profit-taking by funds that trade on buy or sell signals generated by numerical models.
The outlook for metals will depend on China, where growth and demand for industrial materials has slowed. If a Chinese stimulus package does materialize, additional potential infrastructure investment would help to lift commodity prices, UBS analysts said. Lead fell 2.3 percent to $1,827 a ton.
However the lead market is worrying about availability of metal for nearby delivery and is focused on two large holdings of LME warrants, one between 30-39 percent and the other between 50-79 percent.
The concern can be seen in the $13 a ton backwardation or premium for the cash contracts over the three-month future, the highest since April 2015.