May 25 (Bloomberg) -- Copper traders are bearish for a second week after mounting concern that slowing growth in China and Europe would curb demand drove prices to a four-month low.
Nine of 18 analysts surveyed by Bloomberg expect the metal to drop next week and three were neutral, the first consecutive negative outlook since April 6. Hedge funds and other money managers cut their wagers on higher prices by 69 percent in the week ended May 15, the most in a month, Commodity Futures Trading Commission data show.
Raw materials slid to a five-month low this week and more than $4.3 trillion was erased from the value of global equities this month on concern that Greece will exit the euro as the region’s debt crisis deepens. Manufacturing in the 17-nation euro area slumped to the weakest in almost three years this month and may shrink for a seventh month in China, which accounts for about 40 percent of global copper consumption.
“Copper tends to be a reasonably good signal of what’s going on in the real world,” said Guy Wolf, a strategist at Marex Spectron Group in London. “Europe has become a more immediate concern. Most people in the copper market were already concerned about the outlook in China. We’re looking for prices to find a floor at lower levels in the next couple of months.”
Copper gained 0.6 percent to $7,645 a metric ton this year on the London Metal Exchange and traded at $7,503 on May 23, the lowest since Jan. 10. The Standard & Poor’s GSCI gauge of 24 commodities slid 3.6 percent this year and the MSCI All-Country World Index of equities rose 0.3 percent. Treasuries returned 1.2 percent, a Bank of America Corp. index shows.
The metal’s third consecutive annual shortage is narrowing, with demand expected to outpace supply by 158,000 tons this year, compared with 213,000 tons in 2011, according to Barclays Plc. Copper will be in a surplus next year and in 2014, Tiberius Asset Management AG said in a report e-mailed May 18.
While stockpiles monitored by the LME dropped 40 percent this year, some of the metal may be going into bonded warehouses in China that are exempt from a value-added tax and import duties. Inventories in those warehouses are about 600,000 tons, Standard Chartered Plc said in a report April 26. The total including refined and semi-finished metal probably climbed to a record of about 1 million tons, the bank’s analysts said.
China’s refined copper imports slid 21 percent in April from a month earlier, customs data show. Goldman Sachs Group Inc. still expects Chinese demand to drive prices to $9,000 in three months. The bank’s copper consumption indicator, tracking consumer appliance and auto demand in the nation, was at the second-highest level ever last month, the bank’s analysts said in a May 23 report. The gauge will climb about 3 percent this year and about 8 percent next year, they forecast.