Commodities Retreat for Second Day on Slower China, U.S. Economy

Commodities dropped for a second day, led by metals and oil, on signs of economic slowdown in China and the U.S., and speculation a government report will show crude stockpiles rose last week.

The Standard & Poor’s GSCI gauge of 24 commodities fell 2 percent as of 10:08 a.m. in New York, as copper, nickel and silver lost 3 percent or more. Brent crude slipped below $100 a barrel for the first time in six days. China’s manufacturing expanded at a slower pace in April, while ADP Research Institute said U.S. companies added fewer workers than forecast.

“The ADP number is quite disappointing and the Chinese manufacturing report is really weighing on this market,” said Bill Baruch, a senior market strategist at in Chicago, referring to oil prices.

ADP Research said U.S. companies added 119,000 workers to payrolls in April, less than the median forecast of 150,000.

Chinese and Australian reports today also signaled a slowdown as a U.K. Purchasing Managers’ Index showed a third month of contraction. China’s PMI was at 50.6, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. That compared with the 50.7 median forecast of analysts and a March reading of 50.9.

Aluminum declined to $1,826.75 a metric ton in London while copper fell to $6,813.25 a ton. China is the biggest buyer of industrial metals and the largest energy consumer. Gold fell 1.6 percent, after dropping 7.6 percent in April, the biggest monthly loss since December 2011.

OPEC Production

Brent slipped to $99.72 a barrel in intraday trading on the ICE Futures Europe exchange. West Texas Intermediate crude for June delivery fell as much as 3 percent to $90.62 on the New York Mercantile Exchange, decreasing for a second day.

OPEC production increased to a five-month high in April, according to data compiled by Bloomberg yesterday. A report by the Energy Department report at 10:30 a.m. in Washington is expected to show a gain in U.S. crude stockpiles last week.

Copper fell for a second day in New York on concern demand will take time to revive after an official manufacturing gauge was weaker than projected in China.

“Chinese end-users were taking advantage of low prices to restock,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail today. “With China out for three days, the market is losing some of that positive impetus.”

Copper for delivery in July dropped 3.3 percent to $3.084 a pound by 10:10 a.m. on the Comex in New York.

Most European equity and bond markets were closed for a holiday though commodity futures markets remained open.

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