Industrial Metals Head for First January Slump in Four Years

Jan 30, 2014 2:45 pm ET

Jan. 30 (Bloomberg) -- Industrial metals fell, heading for the first January decline since 2010, after manufacturing contracted in China and as the Federal Reserve slowed U.S. economic stimulus. Aluminum dropped to a four-year low.

A factory gauge for China, the world’s largest metals user, showed a final January reading of 49.5, below the level of 50 separating expansion and shrinkage, data from HSBC Holdings Plc and Markit Economics showed. The Fed said yesterday that its monthly bond buying will fall by another $10 billion. Last month’s initial reduction of stimulus triggered drops in emerging-market currencies and equities.

“Markets are focused on contraction in China demand and the Fed’s continued slowing of their stimulus,” Steve Scacalossi, a New York-based director at TD Securities, said in an e-mailed report. “The FOMC confirmed that tapering would continue as planned, and the markets slowly turned over.”

The London Metal Exchange index of six main industrial metals fell for a seventh straight session, taking this month’s loss to 3.3 percent, the worst start to a year since 2010. The slide is the longest since October 2012.

Aluminum for delivery in three months slid 0.7 percent to settle at $1,729 a metric ton at 5:51 p.m. in London, after touching $1,721.85, the lowest since July 2009.

Chinese financial markets will shut for a week starting tomorrow as the nation celebrates the Lunar New Year.

“The coming Chinese New Year has reduced volumes and coincided with more withdrawal of liquidity from the Fed,” said Mark Newson-Smith, head of sales at Xconnect Trading Ltd. in London.

Copper for delivery in three months slipped 0.4 percent to $7,095 a metric ton ($3.22 a pound) on the LME, a seventh straight loss, the longest slump since September 2011. On the Comex in New York, copper futures for delivery in March lost 0.4 percent to $3.2265 a pound.

Zinc slid for a seventh day in London, the longest losing streak since October 2012. Nickel, tin and lead also fell.

--With assistance from Jae Hur in Tokyo. Editors: Millie Munshi, Patrick McKiernan