Copper prices hit 6-year low, blame China
Copper prices extended yesterday’s loses on Tuesday, falling to the lowest in six years as high volatility in the Chinese stock-market reinforced worries of a dropping demand from the nation, the world’s top metals consumer.
Benchmark copper on the London Metal Exchange was falling over 5% to its lowest point since Jan. 30 at $5,289.50 a tonne mid afternoon. On the Comex in New York, futures for September delivery lost 5.9% to $2.389 a pound. So far this year, the industrial metal has lost about 15% of its value.
Beijing has suspended new stock sales and established a market-stabilization fund aimed at fighting off the worst equities selloff in years, amid growing concerns that the stock-market rout could be spreading to the other parts of the economy. A series of stimulus measures taken in the last several months has failed to pause China’s slowdown, triggering concerns that the country’s demand for copper may continue to weaken.
Shanghai Chaos, one of the most prominent Chinese hedge funds, withdrew its short bet on copper last week, Financial Times reported. Open interest, the number of futures contracts held in copper, either long or short, has fallen more than 30% since the beginning of May.
China is the world’s largest copper user, accounting for more than 40% of world consumption last year.