Metal prices tumble as traders eye macro conditions

Chinese commodity futures fell almost across the board Monday due to profit taking following the recent run-up in prices and a renewed focus on market fundamentals.

The most traded copper contract on the Shanghai Futures Exchange (SHFE) fell 1.12 percent to close at 59,070 yuan ($9,361) per ton. The contract crept lower over the session after opening 0.74 percent below Friday's closing price.

The three-month contract on the London Metal Exchange (LME) was trading down 0.8 percent at $8,226 per ton when the Chinese mainland markets closed Monday.

Both contracts were down as domestic investors took more of their money off the table ahead of next week's long holiday, especially considering copper's gains earlier in the month.

"Chinese investors are in profit-taking mode before the National Day holiday. No one wants to wait until the last day of trading because the margins on that day will be so high," a Shanghai-based trader with an international firm told Reuters Monday.

Traders may also be taking a harder look at fundamental factors now that prices have been pushed up, especially those in China.

Inside the country, the outlook is less promising than what the models suggest, according to commodities analysts from the Australian bank ANZ.

"We saw plenty of signs of activity in terms of construction, but mostly State-backed infrastructure projects including rail lines," the analysts wrote Monday. "However, our contacts said the machinery sector was doing poorly and was a real cause for concern, despite still robust retail activity. They also felt that without some kind of pick-up in industrial production, the retail sector could soon start to suffer, too."

Other SHFE base metals fell along with copper, gold and silver futures. Monday's biggest losses occurred in the softs and edible oils sectors.