LONDON/SINGAPORE (Reuters) - Commodity markets lurched lower on Monday after the retreat in Chinese stock markets quickened, fuelling worries of a hard landing in the world’s biggest consumer of raw materials.
Crude oil tumbled to its weakest levels in 6-1/2 years while industrial metals prices also hit multi-year lows amid a broad sell-off of risky assets.
Investors took flight after the Chinese stock market posted its biggest one-day loss since the height of the global financial crisis in 2007, plunging more than 8 percent.
The 19-commodity Thomson Reuters/Core Commodity CRB Index .TRJCRB fell 2.7 percent to its lowest level since 2002, taking year-to-date losses to nearly 20 percent.
Oil led the downward charge as Brent crude futures LCOc1 fell as much as $3 a barrel, or more than 6 percent, to their lowest since March 2009.
“Today’s falls are not about oil market fundamentals. It’s all about China,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told Reuters Global Oil Forum.
“The fear is of a hard landing and that things get out of the control of the Chinese authorities.”
In metals, copper CMCU3 and aluminium CMAL3 hit their lowest since 2009 while iron ore and steel futures in China slid sharply to reach their downside limit.
Benchmark copper CMCU3 on the London Metal Exchange earlier fell nearly 4 percent to $4,855 a tonne. The metal ended at $4,953 a tonne from $5,055 at Friday’s close. [MET/L]
Even traditional safe-haven gold, normally a beneficiary of global financial tumult, failed to get a boost, falling more than half a percent to $1,152.45 an ounce XAU= although still hovering within sight of last Friday’s seven-week high.
“Gold is holding on to some of the gains it made last week and that speaks to the difficulty in the global equity market right now,” Mitsubishi Corp strategist Jonathan Butler said.
Among the day’s rare gainers, Chicago corn for December delivery CZ5 ended up 3-1/4 cents to $3.80-1/2 a bushel and December wheat KWc1 rose 4 cents to $5.08 per bushel, with traders hoping that a tumbling U.S. dollar would make their exports more attractive.
Lean hogs for October delivery quoted on the Chicago Mercantile Exchange (CME) hit their 3 cents daily limit of gains, rising nearly 5 percent to 65.825 cents per lb. Traders said some buyers had jumped in to pick up bargains.
In coal, the most common fuel source for electricity generation, API2 2016 futures TRAPI2Yc1 hit 12-year lows last week, and physical prices for cargoes from Australia’s Newcastle GCLNWCPFBMc2 or South Africa’s Richards Bay terminals GCLRCBPFBMc2 are back to levels last seen before the 2008/2009 boom and bust.
Additional reporting by Karolin Schaps, Naveen Thukral, Pratima Desai, Clara Denina and Colin Packham; Editing by Dale Hudson and Marguerita Choy