Copper declined to the lowest since 2009 as manufacturing data added to evidence that demand is slowing in China, the world’s biggest metals consumer.
A private gauge of Chinese manufacturing unexpectedly fell to the lowest in 15 months. Investors in the nation who are banned from shorting equities may be selling copper instead, exacerbating the metal’s collapse.
The rout could get worse, as Goldman Sachs Group Inc. predicts lower copper prices. Traders and analysts were the most bearish since May in a Bloomberg survey. Shares of Freeport-McMoRan Inc., the biggest publicly traded producer of the metal, are heading for the biggest weekly drop since 2011.
“The culprit behind the recent selloff has to be the fact that China’s voracious appetite for metals seems to be moderating or even declining,” Edward Meir, an analyst at INTL FCStone in New York, wrote in an e-mailed report. “The fact that China’s economy is stalling, especially on the manufacturing side, means that there may not be much in the way of future relief.”
Copper futures for delivery in September fell as much as 1.5 percent to $2.3505 a pound, the lowest for a most-active contract since 2009. The commodity closed 0.1 percent lower at $2.3825 at 1:23 p.m. on the Comex in New York.
Prices on the London Metal Exchange also slid to a six-year low.
Expanding gluts have pummeled markets for raw materials, with the Bloomberg Commodity Index dropping to the lowest in 13 years. Goldman Sachs says demand for copper in China, which consumes about 40 percent of the world’s supply, is poised for the slowest expansion in almost two decades.
Not every bank is bearish. Citigroup Inc. predicts copper will climb more than 15 percent by year-end, helped by rising demand in China from consumer goods and the power grid.
“We think that sustainable copper demand will accelerate,” said Ed Morse, head of commodities research at Citigroup. Prices are “approaching the lows, if not at the lows,” he said on Bloomberg Television.
The slump is driving down shares and increasing pressure on miners to trim costs. Freeport is heading for a 21 percent drop this week.
On the LME, zinc, lead and nickel also fell, while tin and aluminum rose.
“We have continued to see unrelenting selling pressure from Chinese investors, which has been the main weight on metals prices this week,” Nicholas Snowdon, an analyst at Standard Chartered Plc in London, said by e-mail. “A larger net short position from China’s investors is possible.”