Copper (COMEX:HGG14), trading near a 44-month low reached yesterday, fell after weaker-than-estimated industrial production added to signs of slower demand in China, the world’s biggest metals consumer.
Factory production expanded 8.6% in 2014’s first two months, the weakest start to a year since 2009, China’s statistics bureau said today. Premier Li Keqiang said there’s some flexibility around the China’s target of 7.5% growth this year without specifying how much of a slowdown leaders would tolerate. The country accounts for as much as 45% of global copper demand, according to Barclays Plc.
“We’re seeing copper on the defensive because of concerns about China,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. “A lot of the analysts are unsure if the official China growth target is going to hold, especially after the data that came out this week.”
On the Comex, copper futures for delivery in May fell 0.4% to $2.9495 a pound at 12 p.m. in New York. Prices yesterday reached $2.908, the lowest since July 2010.
JPMorgan Chase & Co., Bank of America Corp. and UBS AG cut their forecasts for Chinese economic growth this year.
“Tepid macroeconomic data are likely to shake commodity markets once again,” Credit Suisse Group AG analysts wrote in a report today. “The authorities appear to be walking a fine line in their efforts to slow the pace of credit expansion while not stifling economic activity.”
Copper for delivery in three months dropped 0.7% to $6,461.25 a metric ton ($2.93 a pound) on the London Metal Exchange.
The metal slumped 12% this year, the most among the six main metals traded on the LME, after an unexpected decline in China’s exports and the country’s first onshore bond default.
Orders to remove copper from warehouses tracked by the LME fell for a 16th straight session to 119,250 tons, the fewest since April 2013.
Aluminum and lead also dropped on the LME. Nickel rose, while tin and zinc were little changed.