Low oil prices are contributing to a slowdown in the U.S. metals industry, the Interior Department’s Geological Survey said.
The U.S. primary metals six-month leading index was negative 4.3 in April, the fifth consecutive month below zero, the USGS said in a report on its website. Oil prices have dropped 41 percent in the past year while the London Metal Exchange index of six industrial metals including copper and zinc declined 14 percent over the same period.
“Low oil prices have reduced spending on unconventional oil and natural gas development construction projects and weak new orders for manufactured goods will lead to slower plant construction activity,” the USGS said. “The negative primary metals leading index growth rate indicates that activity in metals industry activity is likely to slow further in the near term.”
Construction is the biggest driver of demand for copper, used in wiring and pipes, according to the New York-based Copper Development Association. Nonresidential activity accounts for two-thirds of construction spending, the USGS said.