Copper Futures Drop on Speculation China’s Demand Will Decline

Jan 22, 2014 2:32 pm ET

Jan. 22 (Bloomberg) -- Copper futures fell on speculation that demand will ebb in China, the world’s largest consumer of industrial metal.

In the fourth quarter, China’s economic growth eased, and industrial production in December expanded at the slowest pace in five months, government data showed this week. Manufacturing probably slackened in January, economists surveyed by Bloomberg said before the release tomorrow of a gauge from HSBC Holdings Plc and Markit Economics. Chinese markets will close from Jan. 31 to Feb. 6 for Lunar New Year holidays.

“You’ve got a lot of the operations in China shut for a week,” Michael K. Smith, the president of T&K Futures & Options Inc. in Port St. Lucie, Florida, said in a telephone interview. “That’s absolutely driving prices lower. Copper is also due for a selloff because it was factoring in a more optimistic global economic future than is really happening.”

Copper futures for March delivery declined 0.4 percent to settle at $3.337 a pound at 1:10 p.m. on the Comex in New York. On Jan. 2, the most-active contract reached $3.4245, a nine- month high.

On the London Metal Exchange, copper for delivery in three months fell 0.6 percent to $7,292 a metric ton ($3.31 a pound). Yesterday, that price settled at a $64.50 discount to supplies for immediate delivery, the most since May 2012.

Production will exceed consumption by 385,000 tons this year, and the surplus will increase to 454,000 tons next year, Goldman Sachs Group Inc. said in a report on Jan. 21.

Freeport-McMoRan Copper & Gold Inc. plans to defer the equivalent of about a 10th of monthly sales from Indonesia until delays related to new export regulations are resolved.

Nickel for delivery in three months gained 0.5 percent to $14,795 a ton in London. Earlier, the price reached $14,815, the highest since Oct. 23.

Aluminum, lead and zinc fell, while tin gained.

--With assistance from Agnieszka Troszkiewicz in London and Liezel Hill in Toronto. Editors: Millie Munshi, Joe Richter