Base metals on the London Metal Exchange (LME) have closed sharply lower, extending early gains after a stronger USdollar and downbeat sentiment from China weighed upon the complex throughout the session.
At the close of open-outcry tradingon Monday, copper was 1.0 per cent lower on Friday's settlement at $US8,119 a metric ton. Nickel led the declines, closing 2.9 per cent lower at $US17,855/ton.
A stronger US dollar weighed upon the dollar-denominated base metals throughout the session, making them less appealing to other currency holders and pushing many prices to multi-week lows.
Some analysts said that the metals were due a correctional "shake out" after many had seen fairly robust gains over recent weeks.
Chinese trading activity re-entered the market after the week-long Lunar New Year holiday, but Chinese investors seemed to lack positive impetus to drive prices higher.
"Chinese traders returned from the New Year holidays with sentiment showing few signs of improvement," said analysts at Sucden Financial.
"Nickel prices lost ground as stops were triggered at the $18,120/ton area -- the eventual dip below $18,000/ton attracted some light buying but for the other metals it seems buyers are still reluctant to step in and happy to remain on the side-lines," they added.
Over the balance of this week, the softer tone the metals displayed on Monday could persist, said Ed Meir at INTL FCStone.
"We say this in view of the fact that the more recent macro numbers coming out of the US and Europe have turned somewhat soggier of late," he added, tipping copper support at $8,000/ton and resistance at $8,322/ton.
Looking further ahead, analysts at Deutsche Bank AG said Monday's price activity belied better fundamental prospects for the base metal group lying ahead.
The metals, they said, will benefit from growing expectations for accelerating global economic activity, particularly in China.
Favoring lead and copper, the bank said, however, that it expects prices to peak in the second quarter of 2013.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Friday PM kerb
Copper 8119.0-8120.0 Dn 86
Lead 2390.5-2391.0 Dn 44.5
Zinc 2154.0-2155.0 Dn 21
Aluminum 2116.0-2117.0 Dn 51
Nickel 17855.0-17860.0 Dn 525
Tin 24300.0-24305.0 Dn 500
Aluminum Alloy 1935.0-1945.0 Dn 25
Aluminum Alloy-NASAAC 1950.0-1970.0 Dn 40