Copper, aluminum pulled down in global slump

Copper and aluminum prices slumped to the lowest in six years as a global sell-off in stock markets exacerbated a broader collapse in commodities.

Copper fell as much as 3 percent and aluminum lost 1.5 percent to hit their lowest intraday levels in London since 2009, while nickel in Shanghai tumbled to its daily lower limit.

Commodities are being shaken as a worldwide rout in equities deepens, with Asian stocks heading for a bear market and Chinese shares erasing all gains made this year. The Shanghai Stock Exchange composite index dropped as much as 8.5 percent. The Bloomberg commodities index collapsed to its lowest since 1999, with Brent crude in London slipping below $45 a barrel for the first time in six years.

Equity markets “are clearly driving sentiment at the moment and that’s weighing on risky assets,” Daniel Hynes, senior commodities strategist at Australia and New Zealand Banking Group, said from Sydney. Markets could fall “pretty quickly” on any more data from China indicating weak demand, he said. A factory index last week showed July manufacturing activity at its weakest since 2009, underlining weak demand in the world’s biggest consumer.

More than $5 trillion has been wiped from the value of global stocks since the yuan was devalued earlier this month, spurring concern that China’s economic slowdown is deepening.

Copper for three-month delivery on the London Metal Exchange dropped to as low as $4,950 a metric ton and was trading down 1.8 percent at $4,965 at 10:30 a.m. in Hong Kong. Aluminum slipped to $1,535 a ton.

LME nickel fell as much as 3.9 percent and slumped 4.4 percent in Shanghai. Zinc in London dropped to the lowest in five years, and the only gainer among LME metals was tin.

Lower prices will put more pressure on some metals producers to trim output. In China, aluminum smelters have proposed reducing production by closing old capacity and delaying new plants. The Chinese smelters also called for the removal of export taxes on primary aluminum, the China Nonferrous Metals Industry Association said in a statement.

Shares in the world’s two biggest aluminum companies slumped as the metal’s price sank to the lowest since 2009. In Hong Kong, China Hongqiao Group, the top producer, fell as much as 7.8 percent, while United Company Rusal dropped more than 10 percent to its lowest in sixteen months.

“The current market atmospherics are being driven by the equity market, so I think the key thing is whether equities can find a base,” said Ric Spooner, a chief market strategist at CMC Markets Asia Pty. Bloomberg