Copper price down on fears of slowdown in China

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The copper price fell on Monday as economic data in China showed unexpectedly strong industrial output but weakness in the property sector.

Copper for delivery in December was down 0.6% on the Comex market in New York, touching $4.42 per pound ($9,724 per tonne).

China’s production of 10 nonferrous metals – including copper, aluminum, lead, zinc and nickel – was 5.26 million tonnes in October, up 0.5% from September but down 2.6% year-on-year, the statistics bureau said.

The Chinese property market, accounting for a quarter of gross domestic product by some metrics, has slowed sharply since May.

Prices of new homes dropped 0.2% on average last month from September, according to Reuters calculations of data released by the National Bureau of Statistics (NBS) on Monday, the first decline since March 2015. In the resale market, prices slumped in all but six of the 70 major cities tracked by the bureau.

On the supply side, new construction starts plunged 33.14% on year in October, extending the 13.54% fall in September, while overall investment by developers in projects dropped 5.4%, deepening from the 3.5% decline a month earlier, Reuters calculations of the NBS data showed.

[Click here for an interactive chart of copper prices]

Fears of a slowdown in China are overblown with the government likely to act if needed to support growth, said Commerzbank analyst Daniel Briesemann.

He said copper should rally strongly later in the decade as demand increases and supply runs short. “The copper market will head into a structural deficit in the next few years but not in the next few months,” he said.

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(With files from Reuters)