Zinc slumped to a two-week low and other industrial metals also fell as speculators sold in response to concerns about US-China trade talks and global growth.
China expressed anger on Monday at a US Navy mission through the disputed South China Sea after US President Donald Trump said last week he did not plan to meet with Chinese President Xi Jinping before a 1 March deadline for a trade deal.
Chinese investors, returning after a week-long national holiday, seemed to focus more on downbeat news than optimism China expressed on Monday about a new round of trade talks with the United States.
“You had seen quite a run-up in base metals prices, with lots of positivity on the trade negotiations, and now that balloon seems to have been punctured somewhat,” said Ross Strachan, senior commodities economist at Capital Economics in London.
“There seems to be more realisation that trying to get a permanent long-term deal between those two parties is extremely difficult to imagine.”
Benchmark zinc on the London Metal Exchange (LME) had shot up nearly a fifth in the month to 5 February, when it touched a seven-month peak of $2,810 a tonne.
But since then it has slipped 6% and was the biggest LME decliner on Monday, down 2.3% at $2,643 a tonne in official open outcry trading. Earlier it touched $2,635.50, the lowest since 25 January.
■ Zinc Stocks: Investors apparently brushed off news that LME zinc inventories have eroded further to a fresh low since January 2008.
“There’s clearly is a pipeline of new mine capacity so some investors will ignore the short-term stocks data and instead look at the longer term picture,” Strachan said.
■ Zinc Technicals: Zinc attracted additional selling due to a weak chart picture, Matt France at broker Marex Spectron in Singapore said in a note. “Zinc has been hammered relentlessly all morning … zinc looks most vulnerable technically as it has breached the 200-day moving average at $2,660.”
■ Copper: Three month LME copper, untraded in official rings, was bid down 0.7% at $6,164.50 a tonne after Chilean state miner Codelco said on Saturday it hoped to soon restart operations at its Chuquicamata copper mine.
■ Nickel: LME nickel gave up earlier gains, slipping 0.1% to $12,555 a tonne in official activity. Its relative outperformance was helped by news that Chinese iron ore futures rose to a record on Monday. Nickel is mainly used to make stainless steel.
■ Dollar: Also weighing on metals was a stronger dollar, making dollar-denominated metals more expensive for holders of other currencies.
■ Prices: Aluminium traded down 0.6% to $1,869 a tonne in official rings, lead was bid down 0.7% at a two-week low of $2,066 and tin edged down 0.2%
