Copper – often seen as a bell-weather for economic growth – as well as other industrial metals have been hit hard by ongoing European debt fears and a slowdown in Chinese manufacturing, sending mining stocks tumblings.
Benchmark copper on the London Metal Exchange, closed at $7,230 a tonne on the London Metal Exchange yesterday, only slightly lower than the last bid of $7,250 tonne on Wednesday.
The metal, which is used in power and construction, is down about 22 per cent so far this month and remains on track to post its biggest monthly fall since October 2008 and its steepest quarterly drop since the fourth quarter of 2008.
Aluminium, which is seen as more resilient metal to equity sell-offs, rose yesterday to $2,230 a tonne from Wednesday's close of $2,235 a tonne. Zinc, which has seen steep declines, ended at $1,925 from $1,942.
But resource stocks lagged behind their raw materials, with mining giant BHP Billiton closing down 1.89 per cent at 1,765p and Rio Tinto falling by three per cent 2,966.5p.
“The current period of extreme financial market dislocation has throttled back the liquidity that was supporting commodity prices and these have retraced more than we had expected,” Deutsche Bank analyst Rob Clifford said in a note.
Barclays Capital’s Gayle Berry said: “The most likely direction in the short-term is probably lower given sentiment is still incredibly negative and lots of the question markets remain unanswered, in particular how the European sovereign debt situation will work out.”