BLBG: Copper Prices Drop in New York as China’s Economic Growth Slows
Copper prices fell the most in a week after a report showed the economy in China, the biggest metal user, expanded at the slowest pace in almost 10 years last quarter, eroding speculation that demand will rebound.
China’s gross domestic product grew 6.1 percent in the first quarter from a year earlier, government data show. That trailed forecasts by economists and is the weakest pace since the fourth quarter of 1999. Before today, copper surged 57 percent this year on speculation that government spending would spur use of the metal.
“The Chinese data disappointed,” Alex Heath, the head of industrial-metals trading at RBC Capital Markets in London, said in a report. The figures were “not the kind of picture that should support further price gains on the metals.”
Copper futures for July delivery fell 3.85 cents, or 1.7 percent, to $2.1705 a pound at 11:12 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest one-day drop since April 6. The most-active contract surged 3.8 percent yesterday as inventories declined.
The metal extended losses after a report showed U.S. builders broke ground on fewer homes in March and permits fell to a record low. Builders are the biggest users of the metal, putting about 400 pounds (181 kilograms) into the average U.S. home.
“The housing data has taken a lot of the wind out of the sails for copper,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “Housing is clearly not out of the woods yet and that’s going to take a toll on copper demand.”
Housing Starts Fall
Housing starts fell 10.8 percent to an annual rate of 510,000, the Commerce Department said today in Washington. Building permits, a sign of future construction, fell 9 percent to 513,000. Copper tumbled 54 percent in 2008 as slumps in housing and manufacturing coupled with mounting job losses slashed demand for the metal.
Lower inventories may limit the decline in copper, analysts at Barclays Capital in London said today in a report.
Inventories monitored by the London Metal Exchange dropped 1.1 percent to 475,200 metric tons today. Supplies have fallen for four straight sessions, the longest string of declines in a month, and are down 13 percent from a four year high on Feb. 25.
On the LME, copper for delivery in three months dropped $79, or 1.6 percent, to $4,740 a ton ($2.15 a pound). The price reached a record $8,940 on July 2.
