The base metals took another bath in blood on Monday. Copper plunged from the pre-dawn hours to the New York open, rallied back to mid-morning, but then sold off again to finish just off its intraday lows at $2.2643/lb., down 8 cents.

Nickel fell back to $6.80, held there until mid-morning, but took a second beating from there to end at $6.6247/lb., down 38¾ cents. Zinc hit the same morning sell point, going from near even to just off its intraday lows at $0.6972/lb., down 4¾ cents. Aluminum rallied late in the day but still shed more than a penny and a half, to $0.7149/lb., while lead also bombed out, dropping 5 cents, to $0.7463/lb.

Copper led the second straight day of major retreat among the industrial metals, as the stronger dollar hammered commodities across the board.

And, as MF Global analyst Edward Meir put it, “The correction is likely to run its course for a little while longer as many metals were overextended on the upside.”

Traders are getting a bit nervous about China as well. That country has been importing copper in massive amounts, swelling Shanghai inventories to 60,647 metric tons last week, the highest level since March 2008.

That gain “may signal that China’s reserve purchases are coming to an end,” wrote Eugen Weinberg, an analyst at Commerzbank in Frankfurt. “There is more than sufficient supply in the market.”

Meir also commented on China, saying that, “We are particularly concerned that the rebound in Chinese demand has yet to show up in the rest of the world, meaning that China’s critical export sector will continue to struggle.”

Elsewhere, London stockpile data continued to lend support, with copper inventories monitored by the LME slipping 3,300 metric tons yesterday, to 286,975 tons. But canceled warrants – metal set to ship – declined by nearly 15%.

In company news, BHP Billiton (NYSE:BHP) and (NYSE:RTP) Rio Tinto’s proposal for a joint Australian iron ore venture is likely to be cleared by the European Commission, UBS said.

But the project “will significantly affect global iron ore supply, so it’s a rightful concern for companies and business circles,” said Yao Jian, spokesman for China’s Ministry of Commerce. China’s anti-monopoly law mandates a government probe into any deal that causes a “certain level of market concentration,” Yao said, but there haven’t been any requests for an investigation yet.

Source: Base Metals Take Bath