LONDON - Copper fell on Monday as investors lost their appetite for risk after European finance ministers postponed an emergency loan to help Greece avoid defaulting on its debt and China demand worries weighed.
Three-month copper on the London Metal Exchange was $8,951 a tonne in official rings, after closing up 0.3 percent at $9,095 on Friday.
“The Greece situation has been weighing on sentiment and I think there are still concerns about Chinese monetary policy and the direction that’s going to take,” Barclays Capital analyst Gayle Berry said.
“Those are the two largest underlying concerns in the market at the moment. Until we get some kind of resolution on the macro front we’ll continue to see this volatile price action.”
In an effort to quell inflation, China has tightened credit, clouding the outlook for metals demand.
In the euro zone, finance ministers applied intense pressure on Greece, saying it had to approve stricter austerity measures before the final decision is made on a further 12 billion euros ($17 billion) in loans.
The euro fell against the dollar, making commodities, including base metals, more expensive for holders of other currencies.
Nickel low
Nickel, untraded in rings, was bid at $21,425 a tonne. It hit a session low of $21,350 a tonne, its lowest since November last year. The price of the metal, used to make steel, is down by 27 percent from the year’s highs reached in February.
“At these levels nickel is looking oversold,” Berry said. “From a fundamental perspective we don’t see any reason why nickel has underperformed to this extent.”
“LME inventories are falling yet prices have been very weak. I think the market is pricing in expectations of a better outlook for supply in the second half of the year.”
Nickel inventories in LME-monitored warehouses fell by 516 tonnes to 110,880 tonnes and are down nearly 20 percent since the start of the year to a near two-year trough, data on Monday showed.
The International Nickel Study Group said in April it expected the nickel market to record a 60,000-tonne surplus this year, compared with a deficit of 30,000 tonnes in 2010.
“We believe that demand growth should at least partially absorb additional supplies, particularly once the Japanese steel industry recovers again,” Credit Suisse said in a research note.
Lead inventories in LME-monitored warehouses fell by 125 tonnes to 322,575 tonnes, data showed on Monday, but are still within spitting distance of 16-year highs.
Lead, untraded in rings, was bid $2,404.50, from $2,450 at the close on Friday.
Aluminium, also untraded in rings, was bid at $2,523 per tonne from $2,545 and tin was bid at $24,650 from $25,005. Zinc was $2,170 in rings from $2,187
