Copper prices dropped Wednesday after a jump in inventories increased worries about a slowdown in China’s economy.<\/b>
\nCopper prices dropped Wednesday the most in 19 months after a jump in inventories increased worries about an economic slowdown in China, the world’s largest consumer of the metal.
Copper futures for July delivery settled 3.49 percent lower at $2.5435 a pound, below their 50-day moving average for the first time since April 6 and their worst drop since September 2015. Prices of the metal continued falling in extended trade to near $2.53 a pound.
\u00ab\u00a0I think the biggest thing is the worries about China, \u00a0\u00bb said Ryan McKay, associate commodities strategist at TD Securities.
\u00ab\u00a0First we had a large build in LME copper stocks today, adding concern to the already elevated inventory levels, \u00a0\u00bb McKay said. \u00ab\u00a0Also manufacturing data from China this week has come in below expectations, raising concerns around Chinese demand.\u00a0\u00bb
Copper performance so far this week
Source: FactSet
On-warrant inventories available for delivery at LME-registered warehouses increased by 38,950 tonnes, or 32 percent, to 160,200 tonnes, the highest since mid-April, according to Reuters.
Late Monday Eastern Time, the Caixin\/Markit manufacturing PMI, a key survey for the Chinese economy, for April showed a greater-than-expected decline to 50.3, the lowest since September 2016.
Copper is a key material used in home construction, industrial manufacturing and consumer goods around the world. The Chinese government injected large amounts of loans last year in an attempt to prevent a sharp slowdown in the world’s second largest economy. While recent economic reports have improved, the stimulus has also slowed.
For copper, \u00ab\u00a0demand conditions are still good, just not as good they were three to six months ago, \u00a0\u00bb said Dane Davis, commodities research analyst at Barclays. \u00ab\u00a0The stimulus is wearing off and it’s starting to feed through in real prices, particularly copper and iron ore.\u00a0\u00bb
Iron ore futures fell more than 6.5 percent Wednesday.
Earlier in the week, copper prices leaped to their highest in nearly a month. Traders expected prices to rise given a planned month-long strike at Freeport-McMoran ‘s Grasberg mine in Indonesia.
\u2014 CNBC’s Gina Francolla and Reuters contributed to this report.<\/p>\n

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Sentiment rank: -1.1<\/div>\n

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