By Pratima Desai
LONDON (Reuters) -Copper prices dropped to two-month lows on Monday as fears of a global growth slowdown, weaker demand, a higher dollar and climbing stocks in London Metal Exchange (LME) registered warehouses sparked a sell-off.
Benchmark copper on the LME was down 0.8% at $7,375 a tonne at 0945 GMT. Prices of the metal used widely in the power and construction industries earlier hit $7,292.5, the lowest since July 21.
"Doom and gloom about growth and repercussions for demand, the stronger dollar and inventory increase are pressuring the base (metal) complex," a metals trader said.
Latest on growth comes from the OECD which said global growth is slowing more than was forecast in the wake of Russia's invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in major economies.
Stocks of copper in LME warehouses at 129,000 tonnes are up more than 25% since Sept 15, while cancelled warrants -- metal earmarked for delivery -- at around 7% compare with 50% in late August.
The dollar against a basket of other major currencies is near its highest since May 2002, making dollar-denominated metals more expensive for holders of other currencies, which will also weigh on demand. [FRX/]
Meanwhile, aluminium prices dropped to 18-month lows of $2,139 a tonne, down 50% since hitting a record high of $4,073.50 a tonne when the market tried to price in disruptions to Russian supplies due to the war in Ukraine.
Exacerbating concerns about supply were production cuts in Europe due to record high energy prices.
But now analysts say with aluminium consumption and prices will remain under pressure due to slowing growth.
"End-use aluminium consumption will also feel the pinch during the next two quarters as Europe veers towards recession," said analysts at Citi in note.
An aluminium production ramp-up in top producer and consumer China is also weighing on prices.
Aluminium was down 0.7% at $2,149, zinc fell 2% to $2,946, lead slipped 0.7% to $1,791, tin gained 0.9% to $20,430 and nickel ceded 4% to $22,475 a tonne.