Copper Slides To Eight-Week Low After More Soft Data From China
Iron ore fell more than 2% and copper extended its recent decline after economic data from China highlighted continued weak spots — especially in its metals-intensive property sector.
(Bloomberg) -- Copper extended four weeks of declines after Chinese economic data highlighted persistent weak spots in the metal’s biggest market.
Copper fell as much 1.1% to $9,631 a ton on the London Metal Exchange, heading for its lowest close in two months. The world’s second-biggest economy released figures on Monday that bolstered concerns over a disappointing demand recovery. While retail sales were stronger in May, growth in industrial output and fixed-asset investment slowed, and the housing slump deepened.
President Xi Jinping’s government has rolled out various measures to steady growth and stabilize the property sector, but Monday’s data triggered calls for more powerful action. Declines in real estate investment and home prices both gathered pace in May.
“The Chinese property sector continues to weaken despite a series of easing policies,” said Wang Yingying, an analyst with Galaxy Futures Co. “People are very pessimistic about the property market.”
Copper hit a record above $11,000 just last month, but has rapidly retreated due to worries about rising global inventories and signs of weakness in China. Metals also came under pressure last week as the Federal Reserve dialed back expectations for rate hikes. Prices traded 1.1% lower at $9,639.50 a ton at 11:29 a.m. local time on the LME.
Aluminum dropped as much as 1.2% to hit a two-month low below $2,500 a ton, after data showed China’s production of the metal hit a record last month as smelters brought back idled capacity. Heavy rains have improved hydropower reserves in Yunnan and allowed smelters to recommence operations after drought sapped their electricity supply in recent years.
“While China leads output growth, it is close to maxing out,” Bank of America Corp. analysts led by Michael Widmer said in an emailed note, adding that smelters are nearing a government-mandated production cap. “Hence, production additions should slow from here, limiting the risk of sustained surpluses.”
--With assistance from Mark Burton.
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