Copper takes a hit

August 14, 2014 06:29 AM

Copper fell to a seven-week low in New York after the German and French economies were weaker than projected and China’s production of the metal was the highest since November.

The euro area’s recovery unexpectedly stalled in the second quarter as German gross domestic product shrank 0.2%, more than economists forecast in a Bloomberg survey, while the French economy stagnated, compared with the estimate for 0.1% growth, data showed today. Copper output in China, the world’s biggest consumer, rose 1.8% to 634,000 metric tons in July, official statistics showed.

“The GDP numbers for France and Germany released today were pathetic, and keep in mind that these do not have any sanctions stamp on them yet,” Naeem Aslam, chief market analyst at Ava Capital Markets Ltd. in Dublin, said in an e-mailed note. “One can only imagine how far these numbers could wane once the sanctions effect is factored in.”

Futures for delivery in December declined 0.1% to $3.1305 a ton by 7:17 a.m. on the Comex in New York after earlier reaching $3.124, the lowest since June 25. Copper for delivery in three months fell 0.2% to $6,868.25 a ton on the London Metal Exchange.

While economic data from the euro-area is negative for industrial metals for now, prices may benefit from European Central Bank stimulus, according to Aslam.

“The upside is that Mario Draghi will have to reach deep in his pocket to stimulate growth in the euro zone, which could also lift growth for industrial metals,” Aslam wrote.

Zinc gained 0.1% to $2,285.50 a ton in London after dropping as low as $2,268.25, the lowest since July 10. Chinese output of the metal jumped 4.9% to 513,000 tons in July, the highest since December 2011, government figures showed. Aluminum and lead production slid.

Lead and tin fell in London. Nickel and aluminum gained.

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