- Strengthening dollar is also pressuring metals prices
- Aluminum, zinc, tin, lead and nickel fall in London trading
Copper futures dropped the most in five weeks on concern the metals rout may deepen on slowing demand in China, the world’s biggest user.
Continued unease over China’s economy, coupled with a stronger dollar as the Federal Reserve moves to raise U.S. interest rates, will make it difficult for commodities to rebound, Stephen Roach, a senior fellow at Yale University and former non-executive chairman for Morgan Stanley in Asia, said in a Bloomberg Television interview in Hong Kong on Tuesday. Fed policy makers start a two-day meeting on Tuesday.
The Bloomberg Industrial Metals Subindex is trading near the lowest since 2004 as China’s slowest expansion in a generation cuts demand. The dollar climbed versus the euro and yen on Tuesday, cutting demand for commodities as alternative assets.
“Most importantly, the ongoing concerns about Chinese growth and demand prospects out of China are the most notable negative reason that we’re seeing today,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “Any moves that we see in the currency markets are certainly going to have an effect on prices.”
On the Comex in New York, copper futures for March delivery declined 2.6 percent to settle at $2.0565 a pound at 1:14 p.m., the biggest drop since Nov. 5. Copper, aluminum, zinc, lead, nickel and tin also retreated on the London Metal Exchange.
Mining shares recovered after reaching the lowest level in more than a decade on Monday. The FTSE 350 Mining Index gained as much as 3.3 percent Tuesday, led by Vedanta Resources Plc. Freeport-McMoRan Inc., the biggest publicly traded copper producer, climbed as much as 5.1 percent.