Copper headed for the biggest monthly drop since January as industrial metals fell on concern demand is slowing in China, the world’s biggest consumer.
China’s benchmark equity index lost 28 percent since peaking on June 12, and the nation’s economy is set for the slowest growth in a quarter of a century. The country uses about 40 percent of the world’s copper and half its aluminum.
“The No. 1 consumer of copper is in the midst of a large equity-market decline, and we see concerns of how far Chinese copper demand fell,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “As a direct result, we saw copper come under some significant pressure over the past several weeks.”
Copper for delivery in three months fell 1.3 percent to settle at $5,260 a metric ton ($2.39 a pound) at 5:50 p.m. on the London Metal Exchange. Prices have fallen 8.8 percent this month, and reached a six-year low on Monday.
Goldman Sachs Group Inc. cut its price outlook last week by as much as 44 percent through 2018 and expects China’s demand to grow at the slowest pace in almost two decades. Copper stockpiles monitored by the LME are at the highest in 18 months. Inventories rose a third day, to 346,125 tons, and have more than doubled in the past year.
Even as demand slows, there’s signs that miners will keep supplies flowing. Copper prices will decline by more than 20 percent before major producers cut output, according to Bloomberg Intelligence.
Also in London, aluminum, zinc, nickel, tin and lead declined.
In New York, copper futures for September delivery fell 1.3 percent to $2.377 a pound on the Comex.