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Copper Goes From Bad to Worse as Prices Tumble to Six-Year Low

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A bad week for copper just got worse as futures tumbled to a six-year low in New York and Goldman Sachs Group Inc. forecast prices will drop another 15 percent by years end.

The rout is driving down share prices and increasing pressure on miners to trim costs. Freeport-McMoRan Inc., the biggest publicly traded producer of the metal, fell the most in six months after an earnings conference call left investors uncertain on the company’s direction.

Expanding gluts have pummeled markets for raw materials, with the Bloomberg Commodity Index dropping to the lowest in 13 years. Copper inventories monitored by the London Metal Exchange have ballooned 92 percent in 2015 amid slowing economic growth in China, the world’s biggest consumer.

“Demand just isn’t there,” said Michael Smith, the president of T&K Futures and Options Inc. in Port St. Lucie, Florida. “Until we see a pick up in China and the other emerging economies, commodities are going to suffer, particularly copper. We’re just going to start seeing build ups in supply, globally.”

Copper futures for September delivery declined 1.8 percent to close at $2.3855 a pound at 1:29 p.m. on the Comex in New York. After the settlement, prices extended their slide to $2.3575, the lowest since July 2009.

Bad Omen

For bullish commodity investors, the metal’s slump is a bad omen because copper has historically been used as an indicator for what’s to come in raw materials and as a gauge of global expansion. Goldman on Wednesday lowered its price outlook for the metal by as much as 44 percent through 2018.

Freeport, the world’s largest publicly traded copper producer, is weighing asset sales and the prospect of curtailing operations in the face of lower commodity prices, Chief Executive Officer Richard Adkerson said Thursday on a conference call. Shares fell as much as 12 percent in New York, the most intraday since Jan. 14.

“In a time of falling commodity prices, investors generally don’t like uncertainty,” said Jeremy Sussman, a New York-based analyst at Clarksons Platou Securities.

On the London Metal Exchange, the metal for delivery in three months lost 1.7 percent to $5,272.50 a metric ton ($2.39 a pound). Aluminum, nickel, lead, and zinc also dropped. Tin rose.

The number of requests to withdraw copper from LME warehouses relative to global inventories dropped to the lowest since March 2013. That suggests consumer appetite is waning and indicates inventories may rise further. Stockpiles are at the highest since May 6, bourse data show.

“The recent down moves have been more extreme than the up moves,” Nic Brown, the head of commodity research at Natixis SA in London, said by phone. “Sentiment remains negative and prices will keep pushing lower.”

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