Copper Falls as China Home-Sales Slowdown Fuels Demand Concerns

May 21, 2014 2:55 pm ET

May 21 (Bloomberg) -- Copper fell the most in two weeks in London on demand concerns amid signs of slowing home sales in China, the world’s largest consumer. Nickel declined.

Sales will gain no more than 5 percent at an annual rate over the next year, compared with 27 percent for 2013, Moody’s Investors Service said today. The real-estate market accounts for about 60 percent of Chinese copper usage, Marex Spectron estimates. Through yesterday, the metal lost 6.5 percent this year on the London Metal Exchange.

“The outlook for China is a bit disappointing,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “When you see the housing market start to weaken, you’re going to see demand for copper decline.”

Copper for delivery in three months slipped 0.8 percent to settle at $6,831 a metric ton ($3.10 a pound) at 6:45 p.m. on the LME. That’s the biggest decline since May 7. In New York, copper futures for delivery in July slid 0.7 percent to $3.123 a pound on the Comex.

Moody’s revised its outlook for China’s property industry to negative from stable. Home sales fell 18 percent in April from a month earlier, according to the National Bureau of Statistics.

Nickel for delivery in three months slumped 1.8 percent to $19,500 a ton on the LME. Prices jumped 40 percent this year, the most among the main six metals traded on the exchange, after leading miner Indonesia barred raw-ore exports in January. LME- tracked stockpiles of nickel increased 7 percent this year to 280,020 tons, daily data showed.

“Inventories are healthy, so I suppose it’s natural for the market to rethink whether the recent run-up in prices is justified,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.

Aluminum, lead, tin and zinc also fell in London.

--With assistance from Jae Hur in Tokyo.