LONDON: Copper prices fell back towards six-month lows on Wednesday after data showed factory activity in top consumer China shrank faster than expected in May.
The figures provided more evidence that China’s economic rebound — already focused on services more than metals-intensive manufacturing or construction — is losing steam. Underlining the weak metals demand, official data showed factory output in Japan and South Korea declined in April.
Stock markets fell, with investors in doubly cautious mood ahead of a crucial vote in Washington on the US debt ceiling.
China’s yuan weakened to its lowest against the dollar since November, pressuring dollar-priced metals by making them costlier for Chinese buyers. Benchmark copper on the London Metal Exchange (LME) was down 0.6% at $8,074 a tonne at 1601 GMT and near last Wednesday’s low of $7,867.
Prices of the metal used in power and construction are down around 6% this month after losing 4.4% in April.
While copper inventories in LME-warehouses almost doubled to 100,000 tonnes in the last six weeks, around 10,000 tonnes was earmarked for delivery in recent days.
Benchmark zinc was down 2.4% at $2,248 a tonne after LME zinc inventories nearly doubled to 87,500 tonnes since May 23, suggesting a surplus.LME aluminium was up 0.8% at $2,242.50 a tonne, nickel fell 2.1% to $20,595, lead slipped 2.6% to $2,011 and tin was unchanged at $25,560.
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