Copper Falls Most in Three Weeks on Concern Demand in U.S., China Will Ebb
Copper fell the most in three weeks on concern that economic growth will slow in China and the U.S., the world’s biggest metal users.
The pace of recovery in the U.S. is likely to be “more modest” than forecast, the Federal Reserve said yesterday. In July, industrial output in China had the smallest gain in 11 months, and retail sales, new lending, producer prices and money supply increased more slowly, reports showed. Copper also dropped as the dollar’s surge eroded the appeal of commodities.
“Sentiment is a little downbeat,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail. “The greenback is stronger, as in the short run, risk aversion makes it appealing.”
Copper futures for September delivery slid 5.85 cents, or 1.8 percent, to close at $3.254 a pound at 1:19 p.m. on the Comex in New York, marking the biggest drop for a most-active contract since July 16. Earlier, the metal touched $3.2385, the lowest level since July 29.
“People are starting to realize that growth is not going to be as strong as they were hoping,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York. Copper prices will fall for the rest of the year, he said.
The MSCI World Index of equities tumbled as much as 2.9 percent. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 1.4 percent. The gauge plunged 36 percent in 2008 amid the recession.
‘Double-Dip’ Concerns
“There’s rising anticipation of a double-dip and greater worry for deflation,” said Frank McGhee, the head metals dealer at Integrated Brokerage Services in Chicago. “It’s pulling the commodities down.”
The Fed reversed plans to exit from aggressive monetary stimulus and decided to keep its bond holdings level to support the U.S. economic recovery.
“We see the initial move by the Fed toward a new round of quantitative easing as a negative, underscoring the dangers of deflation that exist,” Daniel Brebner, an analyst at Deutsche Bank AG in London, said in a report.
Copper for delivery in three months fell $100, or 1.4 percent, to $7,200 a metric ton ($3.27 a pound) on the London Metal Exchange.
Aluminum, nickel, tin, lead and zinc prices also dropped.
To contact the reporters on the story: Anna Stablum in London at astablum@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.
Rate this Page