Copper and aluminum dropped to the lowest since 2009 as demand concerns mounted on the outlook for slower growth in China, the world’s biggest user.
Stocks in Shanghai tumbled the most in three weeks as Chinese investors lowered expectations for further monetary stimulus after data showed home-price gains are spreading. The Asian nation, which consumes about 40 percent of the annual global copper supply and half of aluminum, is growing more slowly than official data suggest, a Bloomberg survey showed.
“China’s sharply lower stock prices makes everyone nervous, and the overall situation for copper is concern that global demand is going to continue to deteriorate,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “The Chinese situation is crucial for metals in general, and there’s little incentive to buy the market.”
Copper for delivery in three months slid 1.6 percent to settle at $5,035 a metric ton ($2.28 a pound) at 5:51 p.m. on the London Metal Exchange. Prices touched $4,983, the lowest since July 2009. Aluminum fell as much as 1.2 percent to $1,549.50 a ton, also the lowest since July 2009.
China’s economy expanded 6.3 percent in the first half of 2015, compared with the 7 percent officially reported, according to the median estimate of economists surveyed by Bloomberg last week.
Zinc, nickel, lead and tin also fell on the LME. In New York, copper futures for December delivery dropped 1.5 percent to $2.286 a pound on the Comex.
The plunge in copper means almost one in five mines is losing money, Macquarie Group Ltd. said Monday. Some mines, especially in China, will have to cut supply or close if prices stay so low, analysts led by Vivienne Lloyd wrote.
While disruptions in mining have reduced supply, that hasn’t been enough to support prices.
“The market seems much more concerned about the demand side,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It’s very much about the sentiment of the market and that has been quite bad.”