Copper futures on the London Metal Exchange (LME) fell to a two-month low on Monday as worries about a slowing global economy, weak demand, a higher dollar and climbing inventories at LME-registered warehouses sparked a sell-off.
LME copper for three-month delivery slipped 0.85 percent to $7.370.00 a tonne after earlier touching $7.292.5, its lowest level since July 21.
"The weak growth outlook, the drag on demand, the strong dollar and rising inventories are all weighing on base metals markets," a metals trader said.
Global economic growth has slowed more than expected in the wake of the Russia-Ukraine conflict as energy and inflation crises threaten to snowball into recession in major economies, according to new OECD data.
Data released on Monday showed LME copper stocks at 129.000 tonnes, up more than 25 per cent since September 15, with write-offs at about 7 per cent of stocks, down from 50 per cent at the end of August.
The dollar index hit its highest level since May 2002, making dollar-denominated commodities more expensive for investors holding other currencies.
Meanwhile, the premium for spot copper over three-month contracts jumped to $100 a tonne as market players closed out short positions, traders said.
LME aluminium for delivery in three months fell to an 18-month low of $2.134.50, down 50 percent from its previous record high of $4.073.50 a tonne as markets tried to factor in supply disruptions from Russia due to the war in Ukraine.
High energy prices have led to production cuts in Europe, adding to supply concerns. But now analysts say consumption and prices will remain under pressure as growth slows. Higher aluminum production in China, the largest producer and consumer of the metal, has also weighed on prices.
LME zinc for three-month delivery fell 3.11% to $2.914.50 a tonne; Three-month tin rose 1.52% to $20.550 a tonne; Three-month lead fell 2.72% to $1.755.00 a tonne; Nickel for delivery in three months fell 4.79 per cent to $22.290 a tonne.
