Copper Falls as China Manufacturing Gauge Drops to 3-Year Low

  • Futures in August capped fourth straight month of losses
  • Shares of Freeport tumble as much as 8.6% in New York

Copper declined for a second day after data showed China’s factory activity fell to a three-year low, underscoring weakening demand in the world’s biggest metals consumer.

Futures in New York have slumped for four straight months, the worst streak since 2008, as the Chinese economy slows to its weakest in decades. The country’s official Purchasing Managers’ Index signaled contraction in August, and a similar measure also showed headwinds in France. The Asian country accounts for about 45 percent of global copper demand, according to Goldman Sachs Group Inc.

Prices have struggled amid concerns that China’s government still hasn’t done enough to buoy growth, even as more spending on the electric grid was announced on Monday. Declines for metals prices are taking a toll on producers. The Bloomberg World Mining Index has tumbled 27 percent in 2015.

“Most metals again are struggling in the wake of more weak Chinese manufacturing data, and despite the announcement of additional multi-year Chinese electricity grid upgrade plans," Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in an e-mail.

Copper futures for December delivery fell 1.5 percent to settle at $2.3015 a pound at 1:15 p.m. on the Comex in New York. Prices dropped 19 percent in the four months through August.

China will continue to hurt commodities in coming months as a volatile equity market and political uncertainty add to concern that economic growth is weakening, according to Citigroup Inc. Corruption investigations have also crippled investment by some state companies, particularly power grid operators that support copper demand, analysts including Ivan Szpakowski wrote in a report Tuesday.

Freeport-McMoRan Inc., the world’s largest publicly traded copper producer, fell as much as 8.6 percent to $9.72 in New York. In Toronto, copper producer First Quantum Minerals Ltd. dropped as much as 9.6 percent.

On the London Metal Exchange, copper, lead and nickel dropped, while zinc and tin gained. Aluminum was steady.

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