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Copper Extends Longest Slump in 18 Years on Slow Demand Concerns

Copper prices are poised for a 10th session of losses of New York, extending the longest slump in 18 years, on signs of weakening demand after manufacturing slowed in China and the U.S., the world’s top metals consumers.

Factories in the U.S. expanded in January at the weakest pace in eight months, and a measure of orders declined by the most since December 1980, data from the Institute for Supply Management showed yesterday. In China, a purchasing managers’ index fell to a six-month low last month as output and orders slowed.

Copper has slumped 16 percent in the past 12 months, partly as economic growth eased in China. Production of refined copper will exceed demand by 385,000 metric tons this year, after a 45,000 ton surplus in 2013, and prices will “grind lower,” Goldman Sachs Group Inc. said in a report Jan. 31.

“The market has been hurt by China for a couple of weeks now,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “And then you have the anemic U.S. number, and there’s also a big production surplus. From the standpoint of the supply-demand equation, it’s still leaning to the bearish side.”

Copper futures for March delivery fell 0.4 percent to settle at $3.1835 a pound on Comex in New York yesterday, capping nine days of declines and the longest slump since December 1995. Prices slid 0.2 percent to $3.1785 at 6:26 p.m. in New York.

China Stockpiles

About $1.9 trillion was erased from the value of global equities last month as China’s economy slowed and the Federal Reserve further cut stimulus on Jan. 29. Copper stockpiles monitored by the Shanghai Futures Exchange jumped 18 percent last month, the first increase since October. The London Metal Exchange Index of the six main metals traded on the bourse fell 3.7 percent last month, the worst start to a year since 2010.

On the LME, copper for three months delivery yesterday settled 0.4 percent lower at $7,038 a metric ton ($3.19 a pound).

Motor vehicle sales in the U.S. slowed to an annualized rate of 15.16 million, the weakest in three months, according to data from Ward’s Automotive Group.

Also in London, aluminum for delivery in three months yesterday touched $1,671.25 a ton, the lowest since July 2009. Zinc, lead and nickel slid, while tin gained.

To contact the reporter on this story: Luzi Ann Javier in New York at ljavier@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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