Metals Fall on Demand Concern as BHP Leads Drop in Mining Stocks

  • Strong economic data needed to push prices higher: Kingdom
  • BHP slides after being named in Brazilian dam-spill lawsuit

Industrial metals extended declines after signs of flagging global economic growth rekindled demand concerns. BHP Billiton Ltd. led mining stocks lower after it was named in a $44 billion lawsuit over a dam disaster in Brazil.

Copper fell as much as 1.6 percent, and most contracts on the London Metal Exchange retreated as global equities weakened.

The LME’s index of metals slumped on Tuesday by the most since March 8, after weak factory data from China, the U.S. and the U.K. damped speculation that stabilizing growth will bolster demand. On Wednesday, a private report showed companies added the fewest workers to U.S. payrolls since April 2013, while government figures showed durable-goods orders rose less than forecast.

“Slowing job expansion tends to underscore global manufacturing weaknesses,” Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in an e-mail. “While some light is evident at the end of a long dark tunnel, the tunnel is longer than perhaps we thought given spreading impediments to growth.”

Copper for delivery in three months fell 1.1 percent to settle at $4,867 a metric ton ($2.21 a pound) at 5:51 p.m. on the LME. Zinc, nickel and lead also fell, while tin rose. Aluminum was little changed. On the Comex in New York, copper futures for July delivery slipped 1.5 percent to $2.1865 a pound.

“Some of the froth has gone off and because of that commodities are taking a breather,” Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures Ltd., said by phone. “You need some strong data, something to push it forward otherwise it will drift and consolidate a little.”

A gauge of 18 large global base-metal producers tracked by Bloomberg Intelligence declined 3.3 percent, led by BHP in Sydney and Vale SA in Sao Paulo. The two miners fell after Brazilian prosecutors filed a civil suit against them and their iron-ore venture over a November dam rupture that killed as many as 19 people and caused severe environmental damage.

In other metals and mining companies:

  • Glencore Plc kept a pledge to produce less metal following last year’s price rout and maintained its earnings outlook for the trading unit.
  • LME aluminum stockpiles fell a 35th day in the longest run since February 2015
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