Copper Drops Most in a Year Leading Metals Slump as Demand SlowsJoe Richter
Copper in London fell the most in a year, while tin and nickel tumbled into bear markets, as slower manufacturing growth fueled concern that demand will fade in China and the U.S., the world’s biggest metals consumers.
A Purchasing Managers’ Index was at 50.6 in April, China’s statistics bureau and logistics federation said today, below the 50.7 median estimate in a Bloomberg survey of economists. In the U.S., the Institute for Supply Management’s factory index fell to 50.7, the slowest pace in four months. A reading of 50 is the dividing line between expansion and contraction.
An index tracking the six main metals traded in London is heading for a third straight quarterly drop, the longest slump since 2008, amid growing inventories and signs that demand may cool. Copper supplies monitored by the London Metal Exchange almost doubled this year, and banks including Goldman Sachs Group Inc. and Morgan Stanley cut price forecasts last month.
“China’s manufacturing data was lower than expected, and the U.S. numbers are showing some weakness as well,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “The bottom line is that we’ve seen a string of weaker data today, and that’s a recipe for lower prices.”
On the LME, copper for delivery in three months lost 3.7 percent to settle at $6,795 a metric ton ($3.08 a pound) at 5:50 p.m. local time, the biggest drop since April 10, 2012. The metal has dropped 14 percent this year.
Aluminum, lead, nickel tin and zinc also declined in London. Tin settled at $19,975 a ton, down 20 percent from a January closing high, meeting the common definition of a bear market. Nickel fell to $14,825 a ton, or 21 percent below its closing high on Oct. 1.
An index tracking the six LME metals is down 8.7 percent since the end of March, after dropping 5.6 percent in the first quarter and 2.7 percent in the fourth. The gauge tumbled 3.2 percent today to the lowest since July 2010.
Markets in China, the biggest copper user, will reopen tomorrow after a three-day break for a national holiday.
The Federal Reserve will probably reduce its monthly bond buying in the fourth quarter to $50 billion from $85 billion as it begins to unwind record stimulus, economists surveyed by Bloomberg said, before a policy meeting that concludes today.
In New York, copper futures for delivery in July fell 3.4 percent to close at $3.08 a pound on the Comex, the biggest retreat in two weeks.