Copper Falls Most in 3 Weeks as Miners Tumble on Weak China Data

  • Six main metals on LME retreat as Chinese equities plunge
  • Anglo American drops as much as 8.9%; Teck also declines

Copper wiped out two weeks of gains as metals and mining shares slumped after data showed manufacturing contracted in China and the U.S., the world’s biggest users of the metal.

All six main contracts on the London Metal Exchange retreated as the worst-ever start to a year for Chinese stocks triggered a trading halt in more than $7 trillion of equities, futures and options. Most raw materials also fell as tension between Iran and Saudi Arabia cut demand for risk assets. The Bloomberg World Mining Index slid the most in almost four weeks.

The LME’s metal index dropped 24 percent last year, reaching the lowest since 2009, as China’s economic slowdown cut consumption and expanded a glut of material. Two Chinese manufacturing gauges since Friday showed contraction, while a measure of services rose, reflecting the country’s transition from factory output to consumption and services. In the U.S., a manufacturing index declined in December to the weakest since June 2009.

“Clearly, industry is still facing considerable headwind, especially given that the Chinese authorities are at pains to erase the over-capacities on the housing market and in many industrial sectors,” Commerzbank AG analysts including Daniel Briesemann wrote in an e-mailed note. “This could preclude any recovery of metal prices in the short term.”

Copper for delivery in three months dropped 2 percent to settle at $4,609.50 a metric ton at 5:52 p.m. on the LME, the biggest loss since Dec. 15. Aluminum, lead, nickel, zinc and tin also declined. On the Comex in New York, copper futures for delivery in March slumped.

"The easiest path is down for metals," Andrew Silver, a broker at Triland Metals Ltd. in London, said by e-mail. "Poor data from China again, manufacturing and the Saudi/Iran issue are hitting the sentiment. Confidence is also being dragged lower by the sell-off in equities."

Copper had ended the year near a six-week high as Chinese producers agreed to cut supplies to curb the surplus. Last year’s rout, the largest since the global financial crisis in 2008, has also prompted some of the world’s biggest miners to reduce output.

The Bloomberg mining gauge slipped as much as 3.6 percent to near the lowest since 2008. Anglo American Plc, last year’s worst performer on the U.K.’s benchmark stock index, dropped as much as 8.9 percent on Monday. Teck Resources Ltd., Canada’s biggest diversified miner, slumped almost 5 percent, as the 22-member Bloomberg Americas Mining Index fell.

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