Copper, Industrial Metals Drop on Second-Half Demand Concerns

  • Barclays says demand for commodity investments may ebb
  • Copper in China’s bonded warehouses rises, BI analysts say

Copper posted the biggest loss in a week as most industrial metals fell amid mounting concern that economic stimulus planned around the world won’t be enough to push up demand.

In the U.S., the largest copper consumer after China, factory orders slid 1.5 percent in June, with durable goods orders slipping by the most since December. The Bloomberg Industrial Metals Sub-index declined 1.1 percent on Thursday, the biggest loss since July 27, even as the Bank of England unveiled an “exceptional” package of stimulus.

Copper has lost 1.9 percent in August after advancing 3 percent in the first half of the year. Inventory in China’s bonded warehouses rose in July from a month earlier, according to Bloomberg Intelligence. Barclays Plc predicted more losses for copper, citing a pattern of commodity investments that tend to deteriorate in the second half of the year.

“Although the outlook does not appear as poor as the second-half turn-out in each of the last two years, it seems almost certain that the period of strongest returns for the market is now behind us,” Kevin Norrish, managing director for commodities research at Barclays Plc in London, said in a note Thursday. “We forecast that copper will move significantly lower.”

Copper for delivery in three months declined 0.9 percent to settle at $4,831 a metric ton at 5:50 p.m. on the London Metal Exchange. In the five sessions through Thursday, the metal is the worst performer among six main base metals traded on the bourse.

Demand for metals usually slows in the summer as plants and factories close for regular maintenance. Purchases of nickel have been reduced as stainless-steel facilities in China shut, according to Yang Bo, an analyst at SMM Information and Technology Co.

Nickel slipped 1.2 percent, the biggest loss Thursday among main metals traded on the LME. Aluminum, zinc and lead also fell, while tin advanced.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE