Copper futures fell the most in 12 weeks after surging interest rates eroded the outlook for demand in China, the world’s biggest user of industrial metals.
The benchmark money-market rate jumped the most since July as China’s central bank refrained from adding funds to markets. Copper also slumped after the nation’s banks tripled the amount of bad loans written off in the first half and data yesterday showed employers in the U.S. hired fewer workers last month than estimated by economists.
“Any bearish news out of China signals that a slowdown may be coming,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Any type of slowdown is going to be bad for metals.”
Copper futures for December delivery slid 2 percent to settle at $3.2675 a pound at 1:18 p.m. on the Comex in New York, the biggest drop for a most-active contract since July 30. Yesterday, the price reached $3.355, the highest since Sept. 20.
“Reversals in copper today seem greater in magnitude, perhaps because it has been used in China as collateral for short-term loans in anticipation of a credit crunch around year-end, as occurred last year around the same time,” Michael Turek, a senior director at Newedge Group SA in New York, said in an e-mail. The metal “took the shocking blow of overnight Chinese money-market rate spikes right on the chin,” he said.
On the London Metal Exchange, copper for delivery in three months fell 2.2 percent to $7,171 a metric ton ($3.25 a pound). Aluminum, tin, lead and zinc slid.
Nickel for delivery in three months dropped 2 percent to $14,560 a ton. Yesterday, the price climbed to the highest since mid-August amid concern that ore exports will be halted next year from Indonesia, the top producer.