Base metals lower on demand, economy concerns

Base metals prices dropped on Monday as worries about demand and the wider global economy continued to control the markets.

The concerns about the impact of the credit crisis on demand were increased after Goldman Sachs lowered its rating on Citigroup (NYSE: C) to “sell”, citing the possibility that the bank could suffer up to $15 billion in write downs over the next half-year.

Copper prices were down 17 cents to $3.03 per pound in New York, while three-month copper  fell $245 to $6,795 per tonne on the London Metal Exchange.

A report released last week by the International Copper Study Group said that production was 62,000 tonnes higher than consumption in August, adding to July’s surplus, and that from the beginning of the year through the end of August consumption in the Western Hemisphere was down by 2.4 percent.

Also sending prices lower was another jump in LME copper inventories, which added another 1,275 tonnes on the session to more than 3.5 days of global consumption.

Lead was nearly 9 percent lower in London as it lost $275 to trade in a range around $3,040/$3,050 per tonne, while zinc touched its lowest price in almost two years at $2,310 per tonne before closing at a loss of $170 to $2,355 per tonne.

Aluminium was down $41 to $2,509 per tonne, tin fell $650 to $16,750/$16,800 per tonne, and nickel dropped $1,050 to $30,200 per tonne.