Fear of a nuclear catastrophe in Japan slammed world stock markets, shredding $1 trillion in equity valuations as investors poured money into government bonds. Oil prices dropped sharply as part of move to risk aversion
Three-month copper on the London Metal Exchange was at $9,075 at 1529 GMT, down from $9,195 a ton at the close on Monday. It earlier hit $8,950, the lowest since Dec. 16 2010.
The metal, used in power and construction, has fallen more than $1,000 a ton from the record $10,190 it hit last month.
“The latest news about radiation leaks in Japan is very worrying and markets hate worries. They hate geopolitical worries, earthquakes, tsunami and now this is yet another level of uncertainty,” said Credit Agricole analyst Robin Bhar.
“Further losses are likely in the next 24 hours because people are retreating from positions. It just all looks very
grim at the moment.”
Tin was the worst performer, shedding about 7 percent to a low of $27,800. It was $9,080 at 1532 GMT.
“Tin and copper appeared to have had by far the best fundamentals, and those metals that had the strongest
fundamentals had the more elevated prices,” said Natixis analyst Nic Brown.
“While the overall outlook has not deteriorated, if you detract from what was high expectations, there’s quite a long way that those prices can fall.”
Worries about the political tensions in North Africa and the Middle East also eroded market sentiment.
Aluminium also fell, to $2,503, from $2,555 at the close on Monday.
Inventories of aluminium rose to 4,624,925 tons, latest data shows, in sight of a record high of 4,640,750 tons hit on Jan 20 2010.
For the past week the metal used in packaging and manufacturing has widened to a contango — a discount for cash material over the three-month contract — of around $34 a ton versus levels of about $20 in early February.
In late January worries about market tightness narrowed the contango to around $7.
But the rising inventories do not necessarily mean that demand for the metal is waning.
“It think material is being moved on-exchange due to the ending of some warehousing funding deals,” Daniel Major, an analyst at RBS, said, adding he expects demand for aluminium to increase in 2011 and thereafter.
Zinc, used in galvanizing was $2,284 from $2,330 at Monday’s close and battery material lead was at $2,491 from $2,520.
Nickel was at $24,950 from $25,850.
