London Metals Exchange tin jumped nearly six per cent on Monday on reports of a plan to build metal stockpiles in China, the world's biggest tin producer, while other base metals fell on dollar gains and weak economic news.
A flurry of bearish economic data in some of the world's biggest metal consuming countries sent prices lower, especially aluminium, which hit a 3-1/2-year low.
In New York, surprisingly steep declines in construction and manufacturing sector readings kept pressure on copper, despite a partial retracement of the dollar's early gains.
US copper futures remained at moderately lower levels into the close, pressured early on by dollar advances and falling US equity markets.
“We're suffering from the strength of the dollar and the weakness of the stock market. We're being sold down with other assets,” said Frank McGhee, head precious metals trader with Integrated Brokerage Services LLC in Chicago.
Copper for March delivery dropped 1.12 percent, or 1.85 cents, to settle at $1.6310 a lb on the New York Mercantile Exchange’s COMEX division.
London Metal Exchange benchmark copper closed at $3590 a tonne compared with $3620 at Friday's finish.
Prices for the metal, used in construction and power, have slumped 60 percent since a record $8,940 a tonne in July.
The dollar pared gains after a US manufacturing report came in weaker than expected and again after Federal Reserve Chairman Ben Bernanke said the US economy remained under considerable strain.
The Fed chief also said scope for further US interest rate cuts to aid growth was limited.
Earlier, the Institute for Supply Management’s index of US factory activity fell in November to its lowest level since 1982, with the new orders index at its lowest since 1980.
At the same time, U.S. construction spending fell a steeper-than-expected 1.2 percent in October.
In Europe’s manufacturing sector, the Markit Eurozone Purchasing Managers Index slumped to 35.6 in November, a low not seen in the survey's 11-year history.
The European data echoed an overnight survey showing Chinese manufacturing activity also slumped on a collapse in export orders.
In early trade, tin prices jumped 5.7 percent following a Chinese government report that the country’s Yunnan province would build a 1-million-tonne stockpile of base metals, including 100,000 tonnes of tin.
After initial enthusiasm for the plan, questions about the purchase amounts caused some players to reverse course.
“The numbers look too large to be realistic,” Leon Westgate, analyst at Standard Bank, said.
“There may be some confusion over whether they are talking about metal in concentrates or total concentrates.”
Three-month ended at $12,370/12,375 a tonne after jumping to $13,000 a tonne, its highest since Nov. 26, from $12,300 on Friday.
