Commodities: Copper futures pummelled in Europe, oil slides again

Copper futures fell to fresh six-year lows on Tuesday, during a dire session for the base metals market, while oil continued to slide on persistent concerns about the direction of China’s commodities import volumes.

Past the midway point of trading on the London Metal Exchange, the three-month delivery copper contract led the sell-off, plummeting below $5,000 per metric tonne for the first time in intraday trading since 2009.

By 1330 BST, copper had recovered back to $5,004.50 down 2.0% or $102.00. Elsewhere, lead (down 2.1%), nickel (down 2.8%) and zinc (down 2.2%) three-month delivery contracts saw heavy declines, while primary aluminium was broadly flat. However, tin defied wider market trends to post an uptick of 0.8% or $125.00 to $15,550 per tonne as oversupply concerns continue to ease.

With the copper market in Shanghai taking a beating, Connor Campbell, financial analyst at SpreadEx, said the base metal will continue to feel the heat. “If anything, the commodity situation only worsened as the day went on. Wednesday sees another data-lacking day for the London market, leaving it extra-susceptible to any overnight movements from China.”

Meanwhile, precious metals also slipped into negative territory with silver bearing the brunt. At 1533 BST, COMEX silver for September delivery was down 3.29% or 50 cents at $14.80 an ounce and heading lower as US trading volumes picked up. COMEX gold was also down 0.38% or $4.20 to $1,114.20 an ounce.

Jasper Lawler, analyst at CMC Markets UK, noted: “Silver’s industrial usage leaves it more exposed to the slowdown in China whilst gold has attracted more safe-haven flows as a hedge against weak stock markets.”

There was little respite in sight for platinum, as spot prices fell 0.88% or $8.82 to $990.10 an ounce, on supply-demand imbalances despite producers such as Lonmin having recently outlined production cuts.

Elsewhere, oil benchmarks continued to trade lower as perceptions of lower demand conspired with oversupply sentiment to send prices lower, albeit the WTI recovered marginally during late afternoon calls. Brent was trading down 0.57% or 28 cents at $48.46 per barrel, while the WTI was back in the green at $42.21 up 0.81% or 34 cents, having traded lower for much of the Asian session.

Finally, the agricultural commodities market was seen faring better with CBOT corn (up 0.27%), ICE cocoa (up 0.65%), cotton (up 0.14%) and CME live cattle (0.25%) futures contracts in positive territory.

However, CBOT wheat futures went against the trend shedding 0.84% or $4.25 to $500.25 per bushel on overproduction concerns. Additionally, a recent warning from the US Grain Council, which noted that lower demand from China and clarification from Beijing about genetically modified crops could impact $2bn worth of annual exports from the US, also cast a shadow over proceedings.