Measures by the Chinese government aimed at stabilizing the equities market are failing to stop a selloff that erased more than $3.2 trillion of value in less than a month.
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“We continue to believe that the equity sell off was mostly a catalyst in commodity markets and that the more far-reaching implications are more erosion in the confidence in Chinese policymakers”.
Aluminium touched a six-year low at $1,641 and zinc hit $1,925, its lowest since December 2013.
Benchmark copper on the London Metal Exchange fell almost six per cent to $US5,261.50 a tonne earlier in the session, its lowest since July 2009.
Greece faces a last chance to stay in the euro zone with its prime minister putting proposals to an emergency eurozone summit after Greek voters resoundingly rejected the austerity terms of a bailout deal. “After the significant moves we saw yesterday, inevitably there is profit-taking”, said Nicholas Snowdon, metals analyst at Standard Chartered. “The concern is that it’s going to ultimately feed through to the real economy, with a negative impact on metals demand”. Zinc traded at $1,930 at the close from $2,014 and lead at $1,722 a tonne, from $1,766. Aggregate trading was more than double the 100-day average for this time, according to data compiled by Bloomberg. Futures in New York have fallen 8.5 percent over the past three days, sliding 0.5 percent on Wednesday to $52.08 a barrel.
China accounts for about half of global copper consumption estimated at around 22 million tonnes this year. Refined output is poised to exceed demand this year and next, Societe Generale SA estimates. Lead earlier touched a near four-month low at $US1,703. “But there is still extreme uncertainty with regards to both the Greek crisis and China’s stock market, which could still potentially weigh on prices if not resolved in a positive way”.
Tin fell almost 5 percent to $13,605.
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Nickel in London declined 9 percent to $10,650 a ton, the biggest drop since May 2010.
