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Morgan Stanley Cuts Base Metals Outlook as China’s Growth Slows

Morgan Stanley reduced its forecasts for industrial metals on concerns slowing growth in China, the world’s biggest consumer, and the nation’s worst cash squeeze in at least a decade will curb demand.

The bank cut its 2013 copper estimate by 3 percent to $3.42 a pound and lowered its nickel prediction by 7 percent to $7.23 a pound, according to analysts Peter Richardson and Joel Crane in a report e-mailed today. Copper for September delivery traded at $3.0285 on the Comex in New York.

China’s central bank said the country should fine-tune its policies as a cash squeeze in the banking system risks exacerbating an economic slowdown. Copper in New York yesterday fell to the lowest in almost three years while aluminum in London extended the longest slump since at least 1987 on mounting concerns demand in China will slow.

“The headwinds to commodity price performance have been intensified by growing signs of deterioration in the quality of this lower growth,” the report said. “Strong credit growth in total social financing in China has raised some increasingly serious market concerns about the direction, composition and risks embedded in this development.”

Goldman Sachs Group Inc. lowered its estimate for 2013 Chinese gross domestic product growth yesterday to 7.4 percent from 7.8 percent, citing weaker economic indicators and tightening of financial conditions. The CSI 300 Index (SHSZ300) of China’s biggest companies tumbled 6.3 percent yesterday, taking its drop from this year’s high to more than 20 percent and meeting the common definition of a bear market.

Morgan Stanley lowered its aluminum forecast for 2013 by 2 percent to 89 cents a pound, while zinc was also cut 2 percent to 89 cents a pound. Tin was reduced by 7 percent to $10.08 a pound and lead was lowered 1 percent to 98 cents a pound.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at

To contact the editor responsible for this story: James Poole at

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