Copper fell to a three-week low amid mounting concerns that demand will falter in China, the world’s biggest metals consumer.
Hedge funds including Hong Kong-based HFZ Capital Management, a joint venture of Red Kite Management Ltd. and Maike Metals International, say demand will weaken in the second half of 2015, even after policy makers in Beijing cut interest rates three times since November in a bid to reverse a slowdown. Copper is heading for the first monthly drop since January.
Base metals are falling amid “concerns about China’s economy, which despite the government’s efforts, is still decelerating,” Edward Meir, an analyst at INTL FCStone in New York, wrote in a note to clients. Also, “the supply/demand balances in a number of metals are no longer as tight as they were expected to be.”
Copper futures for July delivery lost 1.2 percent to settle at $2.778 a pound at 1:28 p.m. on the Comex in New York, after touching $2.773, the lowest since April 29.
Money managers reduced net-long positions in copper futures and options contracts by 3.7 percent in the week ended May 19, the first decline in a month, U.S. Commodity Futures Trading Commission data show.
The Bloomberg Dollar Spot Index rose to the highest in a month, eroding the appeal of commodities as alternative assets.
The rising greenback “makes these assets more expensive in dollar terms,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview.
Copper for delivery in three months slid 0.9 percent to $6,106.50 a metric ton ($2.77 a pound) on the London Metal Exchange.
Aluminum, lead, tin, nickel and zinc also fell on the LME.