Copper futures trading on the Comex market in New York fell for the fourth straight session on Wednesday on fresh doubts about the strength of the economy in top consumer China.
Copper for delivery in May slumped 1.8% to a low of $3.1295 a pound ($6,900 a tonne) in early afternoon trade, down more than 5% so far this year.
Chinese manufacturing data suffered its biggest fall in five years in February with Beijing’s official manufacturing PMI down to 50.3. The slowdown is being blamed on Chinese New Year disruptions, the impact of the government’s clampdown on pollution and a cooling property sector.
While a reading above still 50 indicates expansion, operating conditions for the country’s factories are now the worst in one-and-a-half years. The breakdown shows a widespread deterioration in demand with the subindices for output, new orders and imports all dropping. New export orders contracted for a second month, dropping to 49.
Given its widespread use in construction, transportation and power grid infrastructure copper is considered a good barometer for economic activity and with China consuming nearly half the world’s copper, the price of the red metal is closely correlated with domestic factory conditions.
The PMI numbers suggest economic growth of 6.9% in 2017 slowing to 6.5% this year. A private sector PMI reading by Caixin is out tomorrow and should give a better indication of activity trends in the world’s second largest economy.