Winter Park, Florida 11/01/2016 - Copper washed out on Monday as low oil prices and another capitulation in Chinese equities were too much to overcome.
Copper for March delivery on the Comex division of the New York Mercantile Exchange closed down 4.95 cents, or 2.5 percent, at $1.9725 per pound. Earlier, the red metal hit a seven year low of $1.9665.
"No end in sight yet for this trend with sellers everywhere and buyers waiting for the best moment," said London-based broker Triland Metals, which noted that Chinese stockpiling has not yet had a significant effect, while the scrap market is dead.
The biggest issue remains China, where the the PPI in December fell for the 46th straight month - at -5.9 percent, it just missed the market forecast of -5.8 percent and was unchanged from November. China's December CPI at 1.6 percent was slightly lower than the forecast 1.7 percent but above November's 1.5 percent.
Consequently the Shanghai composite index ended in negative territory, down 5.33 percent at 3,016.704. The SCI fell seven percent on two days last week, triggering a recently implemented circuit breaker. But following mass uncertainty and the onset of panic, China authorities suspended the tool on Thursday.
But other regions are not immune. Freeport-McMoRan saw it's share price fall by as much as 20 percent today - the company is challenged by the slump in copper and crude oil, which tumbled to a 12-year low of $31 per barrel.
Fitch Ratings downgraded Freeport's credit rating on the basis that commodity prices recovery will be prolonged and the company debt at $21.7 billion is burdensome.
"Long-term copper fundamentals benefit from limited new supply, solid demand from China and strengthening demand from developed nations. Copper prices are currently weak, however, given anticipation of a near-term surplus and pressure by speculators," Fitch said.
In other copper news, China's State Reserve Bureau (SRB) completed its purchase of 150,000 tonnes of copper cathodes via a tender on Friday.
"The market underestimates this stockpiling - premiums and prices will both be lifted after the Chinese New Year when demand recovers but there isn't much available in the spot market," an analyst said.
The SRB's purchase will remove most of the surplus on the spot market, a hedge fund-based copper analyst added.
Meanwhile, in the wider-markets, the dollar was 0.53 percent stronger at 1.0868 against the euro, while the Dow Jones industrial average and S&P 500 were down 0.17 percent and 0.44 percent respectively.
"It is back to normal today - the markets did pause a bit on Friday but the China [data/equities] news is still the same. Copper is trying to hold the line but you can't see any rally that won't be sold into," a London Metal Exchange trader said.