Copper prices hit one-month lows overnight as worries about demand in top consumer China, coupled with a strong US dollar, triggered a fresh bout of selling amid low liquidity.
Benchmark copper on the London Metal Exchange ended down 0.7 per cent at $US5,686 a tonne.
Earlier prices of the metal used by investors as a gauge of economic health touched $US5,588 a tonne, the lowest since September 3.
Traders expect volumes to stay low this week due to celebrations in China to mark the 70th anniversary of the founding of the People’s Republic.
“Negative investor sentiment has a lot to do with falling prices and the strong (US) dollar is another negative,” said Caroline Bain, chief commodities economist at Capital Economics.
“Copper demand is subdued, but it’s not falling off a cliff, and the supply picture is constrained. Given the fundamentals copper prices should be higher.”
A rising US currency makes US-dollar-denominated commodities such as copper more expensive for holders of other currencies, which potentially could weigh on demand.
This is a relationship used by funds who trade using buy and sell signals generated by numerical models.
China accounts for nearly half of global copper demand, estimated this year at 24 million tonnes.
The United States and China have been locked in an escalating trade conflict for nearly 15 months.
They have levied punitive duties on hundreds of billions of dollars of each other’s goods, roiling financial markets and threatening global growth and demand for industrial metals.
US manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, further heightening concerns of a sharp economic slowdown in the third quarter.
Prices of the metal earlier touched $US1,713.50 a tonne, the lowest since January 2017, as worries about demand from the transport and packaging industries dominated sentiment.
Aluminium gained 1.1 per cent to $US1,740 a tonne.
The premium for the cash over the three-month contract was last at $US205, matching the peak on September 20 which was the highest since April 2009.
The rise has been fuelled by concern about availability of the stainless steel ingredient on the LME, where stocks around 152,000 tonnes are near historical lows.
Reinforcing that are cancelled nickel warrants – metal earmarked for delivery – at 64 per cent of the total.
Three-month nickel added 1.0 per cent to $US17,220 a tonne.
Zinc was down 3.0 per cent to $US2,305, lead fell 1.8 per cent to $US2,096 and tin rose 2.0 per cent to $US16,250.