Zinc slumped to a two-week low and other industrial metals also fell as speculators sold in response to concerns about U.S.-China trade talks and global growth.
China expressed anger on Monday at a U.S. Navy mission through the disputed South China Sea after U.S. President Donald Trump said last week he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline for a trade deal. Chinese investors, returning after a week-long national holiday, seemed to focus more on downbeat news than optimism China expressed on Monday about a new round of trade talks with the United States.
“You had seen quite a run-up in base metals prices, with lots of positivity on the trade negotiations, and now that balloon seems to have been punctured somewhat,” said Ross Strachan, senior commodities economist at Capital Economics in London.
“There seems to be more realisation that trying to get a permanent long-term deal between those two parties is extremely difficult to imagine.”
Benchmark zinc on the London Metal Exchange had shot up nearly a fifth in the month to Feb. 5, when it touched a seven-month peak of $2,810 a tonne.
But since then it has slipped 6 percent and was the biggest LME decliner on Monday, down 1.9 percent at $2,654 by 1115 GMT. Earlier it touched $2,635.50, the lowest since Jan. 25.
* ZINC STOCKS: Investors apparently brushed off news that LME zinc inventories have eroded further to a fresh low since January 2008.
“There’s clearly is a pipeline of new mine capacity so some investors will ignore the short-term stocks data and instead look at the longer term picture,” Strachan said.
* ZINC TECHNICALS: Zinc attracted additional selling due to a weak chart picture, Matt France at broker Marex Spectron in Singapore said in a note. “Zinc has been hammered relentlessly all morning … zinc looks most vulnerable technically as it has breached the 200-day moving average at $2,660.”
* SHANGHAI ZINC: The most-traded zinc contract for March delivery on the Shanghai Futures Exchange fell as much as 3.3 percent, its sharpest intraday drop in 11 weeks.
* COPPER: Three month LME copper shed 0.8 percent to $6,163 tonne after Chilean state miner Codelco said on Saturday it hoped to soon restart operations at its northern Chuquicamata copper mine a day after heavy rains forced its suspension.
* NICKEL: LME nickel was the only metal in positive territory, rising 0.3 percent to $12,605 a tonne, helped by news that Chinese iron ore futures rose to a record on Monday, the first session after a week-long national holiday, on concerns about supply from Brazil. Nickel is mainly used to make stainless steel.
* DOLLAR: Also weighing on metals was a stronger dollar, buoyed as investors bought it as a safe-haven asset, making dollar-denominated metals more expensive for holders of other currencies.