Red metal tumbles the most in seven months

Stockpiles tracked by LME climbed for the third straight day

Copper futures tumbled the most in seven months on Wednesday, 15 October 2014 as signs of muted inflation signaled lower metal demand in China. Stockpiles tracked by the London Metal Exchange climbed for the third straight day, the longest string of gains in a month. Retail sales in the U.S. dropped more than forecast in September, a government report showed today, adding to demand concerns.

High-grade copper for December delivery declined 8 cents, or 2.6%, to $3.01 a pound. Copper fell 6.1% in the third quarter amid concern that supplies will top demand.

Copper for delivery in three months fell 2.3% to $6,641 a ton ($3.01 a pound) on the LME.

In September, Chinese consumer costs rose at the slowest pace since January 2010, and U.S. wholesale prices unexpectedly fell for the first time in a year, separate reports showed today.

The International Copper Study Group estimates that the global market will swing to a surplus next year. Demand will top refined production by 307,000 metric tons in 2014. Even with signs of slowing demand, mining companies are spending more to increase production. Inventories monitored by exchanges in London, New York and Shanghai increased in five of the past six weeks.

Economic data at Wall Street included Retail Sales, PPI, Empire Manufacturing, Business Inventories, and the MBA Mortgage Index. Retail sales declined 0.3% in September following an unrevised 0.6% gain in August, while the consensus expected a downtick of 0.2%. Motor vehicle sales declined 0.8% after increasing 1.9% in July, which was in-line with the decline in per unit sales reported by the motor vehicle manufacturers. Excluding autos, retail sales declined 0.2% in September after increasing an unrevised 0.3% in August, while the consensus expected an increase of 0.3%.

Producer prices fell 0.1% in September after reporting no change in August, while the consensus expected an increase of 0.1%. As expected, energy prices fell 0.7% in September, which was the third consecutive monthly decline. Food prices fell for the second consecutive month and the fourth time in the last five months, dropping 0.7% after falling 0.5% in August. Excluding food and energy, core PPI was flat after increasing 0.1% in August, while the consensus expected an increase of 0.1%.

The Empire Manufacturing Survey for October fell to 6.2 from 27.5, while the consensus expected a downtick to 20.4. Also, Business inventories increased 0.2% in August after increasing an unrevised 0.4% in July, while the consensus expected an increase of 0.4%. The weekly MBA Mortgage Index rose 5.6% to follow last week's 3.8% increase.

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