Copper Declines as China Manufacturing Gauge Misses Estimates

Jun 03, 2014 3:36 am ET

June 3 (Bloomberg) -- Copper fell as a private gauge of China’s manufacturing missed estimates, curbing demand prospects from the world’s biggest user of the metal.

The contract for delivery in three months on the London Metal Exchange retreated as much as 0.7 percent to $6,885 a metric ton and was at $6,914.75 by 3:13 p.m. in Hong Kong. The metal rose 1.3 percent yesterday, the most since May 12.

A purchasing managers’ index was at 49.4 in May, HSBC Holdings Plc and Markit Economics said in a statement today. That compared with 48.1 the previous month and the median 49.7 forecast in a Bloomberg News survey. The official factory PMI released June 1 rose to 50.8 for May, beating the 50.7 median estimate of economists polled by Bloomberg. Numbers below 50 indicate contraction.

“After the weekend’s positive official factory output report, today’s HSBC data disappointed investors,” said Hwang Il Doo, a senior metals trader at Korea Exchange Bank Futures Co. in Seoul. “There is good selling interest around $6,950.”

China’s Qingdao port has halted shipments of aluminum and copper on investigations by authorities over discrepancies between metal pledged as collateral and available metal, Reuters reported yesterday.

The development will probably make companies more wary of financing copper, putting downward pressure on prices, said Tetsu Emori, a senior fund manager at Astmax Asset Management Inc. in Tokyo.

In New York, futures for delivery in July slid 0.5 percent to $3.156 a pound. Futures for delivery in August climbed 0.1 percent to close at 48,690 yuan ($7,790) a ton on the Shanghai Futures Exchange. Markets in China were closed yesterday.

On the LME, aluminum and lead advanced, while nickel and zinc were little changed. Tin fell.