London, England — MININGREVIEW.COM — 24 October 2008 – Copper and aluminium tumbled to their lowest levels in almost three years yesterday, dragged down by worries about slowing demand for metals and a strong dollar.
Reuters reports that major U.S. stock indexes fell more than 3% in early trade, while European stocks sank 5 %, led lower by falling mining stocks such as BHP Billion and Rio Tinto.
London Metal Exchange copper for delivery in three months dropped to US$4 099 a tonne – its weakest since November 2005, and in Shanghai copper plunged by its 5% limit to 36,070 yuan a tonne – a three-year low.
Reuters quotes Barclays Capital analyst Gayle Berry as saying: “What we’re seeing is market pricing expectations of near recessionary demand for base metals,” adding that a rise in copper stocks added to worries of weakening demand.
Copper stocks in LME warehouses rose 1 850 tonnes to 207 750 – about 90% above the lows for this year seen in May, and accounting for just over four days of global consumption.
The dollar also weighed on metals, as it soared to a two-year high against the Euro and a five-year high against Sterling. Metals are priced in dollars, and a stronger dollar makes it more expensive for holders of other currencies.
“The stronger dollar is also having an influence as it reduces demand for metals from around the world,” said London & Capital chief investment officer Ashok Shah. Demand from China was a big drive, and now the momentum in terms of demand is coming down very quickly,” he added.