Copper declined in New York and London after manufacturing in China, the world’s largest consumer of industrial metals, expanded at a slower pace for a second month, signaling that demand growth may be weakening. The Purchasing Managers’ Index fell to 52.1 from 53.9 in May, the Federation of Logistics and Purchasing said today. That was less than the median 53.2 estimate in a Bloomberg survey of 12 economists. The report added to concern that a Chinese slowdown combined with austerity measures in Europe may undermine the global recovery. Moody’s Investors Service said it may cut Spain’s top credit rating. “The markets are down on the back of concerns of a slowing Chinese economy,” Marc Elliott, an analyst at Fairfax IS in London, said today by telephone. Futures for September delivery dropped 4.4 cents, or 1.5 percent, to $2.9065 a pound at 8:48 a.m. on the Comex in New York. Copper for delivery in three months fell 1.5 percent to $6,419 a metric ton on the London Metal Exchange. The Chinese PMI, released by the logistics federation and the Beijing-based National Bureau of Statistics, covers more than 730 companies in 20 industries. An output index fell to 55.8 from 58.2, the federation said. A measure of new orders slid to 52.1 from 54.8 and an export-order index dropped to 51.7 from 53.8. Exports from Asia “have continued to post strong growth so far this year, but the recent events in the European Union clearly represent quite a considerable downside risk in the months ahead,” Alex Heath, the head of industrial-metals trading for RBC Capital Markets, said in a report today. Also in China, HSBC Holdings Plc’s manufacturing index slid to a 14-month low, declining to 50.4 from 52.7 in May. HSBC’s survey, released with Markit Economics, covers more than 400 manufacturing companies and is weighted more toward smaller, privately owned business than the government’s PMI, according to the bank. U.S. Manufacturing Data In the U.S., copper’s second largest copper user, the ISM index manufacturing index probably fell to 59 in June from 59.7, according to median forecast of economists. The Tempe, Arizona- based ISM’s report is due at 10 a.m. New York time. Estimates in the Bloomberg News survey range from 55.9 to 61.2. Copper has dropped 14 percent this year as the dollar gained and investors speculated that monetary tightening in China and the European sovereign-debt crisis may curb demand. Stockpiles of copper tracked by the LME fell for a 10th day to 449,425 tons, the lowest level since Dec. 4. Bookings to remove metal from warehouses rose for a second day, up 2.5 percent to 35,425 tons, the highest since March 3. Aluminum for three-month delivery on the LME dropped 1.5 percent to $1,948.50 a ton. Lead eased 1.7 percent to $1,720.20 a ton, nickel declined 2.4 percent to $19,272 a ton and zinc fell 2.1 percent to $1,755 a ton. Tin dropped 1 percent to $17,250 a ton. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.

Source