Copper fell after posting the largest weekly advance in 40 months as the outlook for increased production and receding demand signaled ample supplies.
The copper market will be balanced or in small surplus this year, before strong mine-supply growth and a slowdown in China in 2016, National Australia Bank Ltd. said in a report. The metal has dropped 4.9 percent the past 12 months on signs of ebbing expansion in China, the world’s biggest user.
“The supply situation looks comfortable, and people need to see more from China to boost demand,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Also, the market is taking a breather after the big run up.”
Copper futures for July delivery on Comex fell 0.3 percent to settle at $2.9205 a pound at 1:19 p.m. in New York. Last week, the price jumped 6.4 percent, the most since Dec. 2, 2011, after gains for manufacturing spurred optimism that the economy is stabilizing in China.
On May 4, a report from HSBC Holdings Plc. and Markit Economics showed the final April reading for a China purchasing managers’ index was 48.9, the lowest in a year and missing the median forecast of 49.4. A level below 50 signals contraction.
“China’s authorities are becoming more concerned about the economic downturn,” Wang Tao, chief China economist at UBS Group AG in Hong Kong, wrote in a note Monday. “In the next couple of months, we expect the government to speed up infrastructure investment with enhanced support from policy banks and cut the benchmark interest rate.”
About half of China’s copper consumption is related to housing and property, according to Goldman Sachs Group Inc. Stockpiles in warehouses monitored by the London Metal Exchange have climbed for nine straight months.
London markets were closed for a public holiday.