Copper Falls Most Since January as China’s Producer Prices Drop

Copper futures fell the most since January after factory-gate deflation deepened in China, the world’s largest metals consumer.

The nation’s producer prices dropped 4.8 percent in February, extending a record stretch of declines to 36 months, according to official data released Tuesday. Copper has slumped 13 percent in the past year amid signs that China’s slowing economy will damp demand for industrial metals.

“The producer purchasing price has gotten lower, indicating demand is not strong enough for them to place more orders,” Richard Fu, the director for Asian commodity trading at Societe Generale Newedge U.K. Ltd. in London, said in a telephone interview. “That’s one more reason why all the metals are easing lower today.”

On the Comex, copper futures for May delivery dropped 1.7 percent to settle at $2.624 a pound at 1:27 p.m. in New York, the biggest loss since Jan. 27.

The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, rose to the highest since the data begins in 2004. A stronger greenback makes commodities priced in the currency less attractive to investors.

“Clearly, there are headwinds for metals from the dollar,” David Wilson, the director of metals research and strategy at Citigroup Inc., said by telephone from London.

Copper for delivery in three months slid 1.8 percent to $5,765 a metric ton ($2.61 a pound) on the London Metal Exchange. Inventories monitored by the LME rose for an eighth day to the highest since January 2014.

Also in London, tin, zinc, lead, nickel and aluminum declined.

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