Copper fell to a nine-week low on concern that demand will falter after manufacturing in China expanded at the slowest pace in six months. Nickel tumbled the most since January 2009 and lead plunged 7.6 percent.
China is the world’s biggest metal user. A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics slid to 55.4, the lowest level since October. Copper prices dropped 5.6 percent in April, the first monthly decline since January, partly on concern that China’s efforts to cool its economy will erode demand for industrial commodities.
“China is the driver,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York. “People are worried about what impact their tightening will have, and this manufacturing report shows things are already slowing. Copper will have a tough time.”
Copper futures for July delivery dropped 11.5 cents, or 3.5 percent, to $3.1785 a pound on the Comex in New York. Earlier, the price touched $3.172, the lowest level for a most-active contract since Feb. 25.
Copper for delivery in three months tumbled $404.50, or 5.4 percent, to $7,025.50 a metric ton ($3.19 a pound) on the London Metal Exchange, the biggest drop since Jan. 27, 2009.
Traders focused on the outlook for Asia and shrugged off a Commerce Department report that showed U.S. factory orders unexpectedly rose 1.3 percent in March, Selkin said. In 2009, copper prices more than doubled as Chinese imports climbed to a record.
Copper in New York is down 5 percent this year as a debt crisis in Europe spurred concern that slowing global economic growth will reduce consumption.
“This could be the start of a more sustained correction,” said Daniel Brebner, an analyst at Deutsche Bank AG in London. “China appears to be set on instilling some discipline on growth, draining liquidity to rein in inflation and control excess speculation in some asset classes, such as real estate.”
In London, nickel tumbled $1,650, or 6.3 percent, to $24,650 a ton, the biggest drop since Jan. 12, 2009.
After gaining 42 percent this year through yesterday, the metal is poised to decline as world supplies climb at the fastest pace in a decade.
Lead plummeted $170 to $2,060 a ton. The percentage loss was the biggest since Sept. 10.
Zinc dropped $138, or 6 percent, to $2,147 a ton, the largest decline since June 15.
Aluminum and tin also dropped. The LME was closed yesterday for a holiday.