Copper fell to the lowest in almost three years in New York on concern that slowing growth in China will curb demand as inventories reach a 10-year high. Aluminum extended the longest slump since at least 1987.
China’s central bank said there’s a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signaling no relief from a cash squeeze. Copper stockpiles monitored by the London Metal Exchange climbed to the highest since June 2003 and Freeport-McMoran Copper & Gold Inc. (FCX)’s Grasberg mine in Indonesia is resuming output after a tunnel collapsed on May 14.
“China’s credit crunch is exacerbating a slowdown there that was already going on,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “That’s going to slow world demand for copper. And inventories are growing.”
Copper futures for September delivery fell 2.3 percent to settle at $3.0285 a pound at 1:12 p.m. on the Comex in New York after touching $2.9935, the lowest for a most-active contract since July 20, 2010. Trading volume in New York was 38 percent higher than the average for the past 100 days at this time, according to data compiled by Bloomberg.
Chinese equities plunged the most in four years, and the CSI 300 Index entered a bear market. The nation’s overnight repurchase rate is 6.47 percent, more than double this year’s average, according to a fixing compiled by the National Interbank Funding Center.
As of June 18, funds boosted net-short positions to 29,018 futures and options, the biggest bet on lower copper prices since April, according to the U.S. Commodity Futures Trading Commission.
LME copper inventories increased 2 percent to 678,225 metric tons on deliveries in New Orleans, the Belgian port of Antwerp and Johor, Malaysia. Stockpiles have more than doubled this year, with about 47 percent waiting to be delivered.
On the LME, copper for delivery in three months declined 2.2 percent to $6,670 a ton ($3.03 a pound).
Aluminum for delivery in three months on the LME fell 1.2 percent to $1,771.50 a ton, after touching $1,762.50, the lowest since July 23, 2009. Prices fell for the 13th consecutive session, the longest slump since at least June 1987, according to data compiled by Bloomberg. Nickel, tin, zinc and lead also slid in London.
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