Copper prices tumbled yesterday on worries about slowing demand for the industrial metal while warm weather pushed oil to its lowest level for more than a year in a turbulent day for commodities traders.
The metal fell more than 2 per cent, falling at one point to $5,625 (£2,893) per tonne, its lowest since last April, on the London Metal Exchange (LME).
"Copper is once again getting thrashed," said Edward Meir, metals analyst at Man Financial in New York. "Its weakness is spilling over into the rest of the group."
Lead fell 2 per cent, while aluminium and zinc both lost 1.5 per cent. "We think it's only matter of time when many of the other high fliers correct as well," said Mr Meir. Analysts said the fall in copper prices, which have lost 35 per cent since May, was linked to the growing gloom over the outlook for the US economy in general and the housing sector in particular.
Stocks in LME-registered warehouses, often a gauge of demand, rose by more than 10,000 tonnes in the first three working days of January, and, at 193,175, are more than twice their level at the start of last year.
Copper prices should be nearing a floor, analyst Robin Bhar at UBS said in a report, adding: "But a further slippage towards $5,000 a tonne cannot be ruled out."
The fall in copper prices hit mining stocks listed in London, with Xstrata, Rio Tinto and Kazakhmys down more than 4 per cent, far outpacing the 0.5 per cent drop in the FTSE 100 index.
Oil prices dropped by 4 per cent for the second day in a row in New York, taking them below $56 a barrel. Prices are down 29 per cent from the record of $78.40 a barrel reached in July.
In London, Brent crude oil fell more than $2 to trade below $56 a barrel for the first time since December 2005.
OPEC, the oil producers' cartel, said it might have to act if the steep falls continued in a move that might provide a floor to the price fall.
An Iranian official said OPEC was keeping a watchful eye on hedge fund selling that had contributed to a 6.5 per cent price drop since the start of 2007. The group has already agreed output cuts totalling 1.7 million barrels per day.Reuse content