MELBOURNE: London copper drifted on Wednesday, with China's economic growth meeting expectations in the third quarter but an impending slowdown in real estate growth painting a mixed outlook for metals demand.
China's economy grew 6.7 percent in the third quarter from a year earlier, steady from the previous quarter, boosted by factors such as increased government spending. Real estate investment growth, a bellwether of metals demand, beat expectations, although cities' measures to restrict home sales mean the demand growth may cool in the months ahead.
China's new construction starts in September, measured by floor area, were down 19.4 percent from a year ago, Reuters calculations showed, a sharp deceleration from 3.3 percent in August. "Overall it's still consistent with our China economists' point of view that the economy is slowing but not going into a hard landing," said analyst Amy Li of National Australia Bank in Melbourne.
"Base metals are used in infrastructure and real estate, so we will likely see demand slow for copper and aluminium as China transitions into a more consumer focused economy."
Three-month copper on the London Metal Exchange had drifted down to $4,670 a tonne by 0729 GMT, after closing steady in the past two sessions and holding above one-month lows at $4,623.25 a tonne touched on Friday.
Other LME metals also fell, with the heaviest hits to nickel , down 1.4 percent, and aluminium, down 0.7 percent. Shanghai Futures Exchange copper ended down 0.3 percent at 37,190 yuan ($5,519) a tonne.
Supporting metals, Chinese banks extended 1.22 trillion yuan ($181 billion) in new loans in September, well above expectations and capping a record nine-month lending spree.
China's government also said it would strictly control the expansion of its non-ferrous metals industry, encourage consolidation and boost proven ore reserves as part of its five-year development plan for the industry.
Supporting the dollar, US consumer prices recorded their biggest gain in five months in September, pointing to a steady pickup in inflation that could keep the Federal Reserve on track to raise interest rates in December.
BHP Billiton , the world's biggest diversified miner, said on Wednesday it was finally detecting indications of a commodity market turnaround, giving its most upbeat assessment in about five years.
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