SHANGHAI (Dow Jones)--Base metals on the Shanghai Futures Exchange mostly declined Tuesday, with copper falling to a more-than-nine-month low as investors continued to shy away from risky assets amid economic uncertainty.
Benchmark November copper settled 1.6% lower at CNY62,850 a metric ton.
Investor worries about a global economic slowdown intensified after softer-than-expected housing data from the U.S. overnight, while a decision by ratings agency Standard & Poor's to downgrade Italy's long- and short-term sovereign credit ratings one notch to A from A+ added to fears over the health of the region's economy.
Copper fell as much as 2.2% to CNY62,460/ton intraday, but some traders said low prices could also attract some dip buying.
"A lot of people are still bearish, at least in the near term, so prices are not going to pick up significantly unless there's some substantial progress in resolving the euro-zone's deepening debt crisis," a physical trader at a foreign house in Shanghai said.
The arbitrage window between Shanghai and London, where traders buy on London and sell on Shanghai to make profits from the price difference, was slightly open, but "the period of time in which you don't lose money is quite short."
On the fundamentals front, unionized workers at copper mining company Sociedad Minera Cerro Verde SAA (CVERDEC1.VL), controlled by U.S.-based Freeport-McMoRan Copper & Gold Inc. (FCX), ended a strike over the weekend, a union official said Monday.
"But macroeconomic conditions already take precedence over fundamentals, I don't see this having anything to do with prices these days," Shanghai Cifco Futures analyst Fang Junfeng said.
"Metals are still likely to trade in tandem with equities' sentiment."
Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY63,200-CNY63,300/ton, down from CNY64,250-CNY64,350/ton Monday.
Three-month London Metal Exchange copper ended Monday's afternoon kerb $332 lower at $8,364/ton.
It was quoted 0.3% higher at $8,393/ton around 0700 GMT, when the SHFE closed.
Aluminum was only a tad down, bucking the trend as relatively low stocks lent strong support to prices, helping the metal fare better than its peers amid economic turbulence.
The Shanghai Metals Market report said non-exchange stocks in the cities of Shanghai, Wuxi, and Nanhai stand at 341,000 tons as of Monday, lower than China's weekly aluminum consumption of 350,000 tons. SHFE aluminum stocks stand at 110,016 tons as of Friday, the lowest level since 2010 and down 74% from its 2011 high of 431,356 tons.
SHFE aluminum settled steady, zinc settled 0.9% lower and lead ended 1.6% lower.
Tuesday's settlement prices in yuan a metric ton and LME late kerb prices from Monday in dollars a ton:
Metal SHFE LME
Copper Dec 62,850 Down 1,020 3Mo 8,364 Down 332.0
Aluminum Dec 17,040 Down 5 3Mo 2,340 Down 39.5
Zinc Dec 16,335 Down 150 3Mo 2,100 Down 58.0
Lead Nov 15,855 Down 250 3Mo 2,301 Down 64.0
-Yue Li contributed to this article; Dow Jones Newswires; (8621) 6120 1200; yue.li@dowjones.com
