Copper Caps Worst Year Since 2011 as China’s Economy Cools

Copper Caps Worst Year Since 2011 as China’s Economy Cools
By Agnieszka de Sousa and Joe Deaux – Dec 31, 2014, 1:34:50 PM

Copper capped the biggest annual loss in three years in London amid signs of an economic slowdown in China, the world’s largest metals consumer.

The final reading this month for the manufacturing Purchasing Managers’ Index for China from HSBC Holdings Plc and Markit Economics came in at 49.6, the lowest in seven months. A figure below 50 signifies contraction. China is on course for the slowest year of economic growth since 1990, according to a Bloomberg survey. Copper dropped 14 percent this year amid prospects for fading demand from the Asian nation.

“The biggest stumbling block is you have China certainly slowing down,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “If people have trades that they want to put on for the start of 2015, buying copper doesn’t seem to be one of them.”

Copper for delivery in three months on the London Metal Exchange fell 0.4 percent to settle at $6,300 a metric ton ($2.86 a pound) at 2:50 p.m. The drop this year was the biggest drop since a 21 percent loss in 2011.

The global copper market is poised to swing to a surplus of 139,000 tons next year from an estimated 128,000-ton deficit this year on more output from mines, according to RBC Capital Markets. Slowing demand in China could push the market into a bigger surplus in 2015, RBC analyst Fraser Phillips said in a report last week.

Copper stockpiles tracked by the LME rose 2.8 percent to 177,025 tons, the highest since May, data showed today. Inventories are down 52 percent this year, the biggest decline in a decade.

Aluminum, lead and zinc were also lower in London, while nickel and tin advanced. The LMEX index of six metals fell 7.8 percent this year.

In New York, copper futures for March delivery declined 1 percent to $2.8255 a pound on the Comex, closing down 17 percent for 2014. Trading was 54 percent below the average of the past 100 days for this time, according to data compiled by Bloomberg.

To contact the reporters on this story: Agnieszka de Sousa in London at atroszkiewic@bloomberg.net; Joe Deaux in New York at jdeaux@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Joe Richter

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