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Copper fell to a three-month low on Tuesday, after a mounting emergency at a quake-stricken nuclear plant in Japan sparked a slide across financial markets in which investors abandoned investments perceived as risky.
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 tonne at the close on Monday. It earlier hit $8,950, the lowest since December 16.
The metal, used in power and construction, has fallen more than $1,000 a tonne 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% to a low of $27,800. It was $29,080 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.
INVENTORIES
Aluminium also fell, to $2,503, from $2,555 at the close on Monday.
Inventories of aluminium rose to 4,624,925 tonnes, latest data shows, in sight of a record high of 4,640,750 tonnes 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 tonne 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.
