Copper fell in London, snapping five days of gains, after the economy slowed in China, the world’s largest user of the metal.
Growth in the gross domestic product dropped to 6.1 per cent in the first quarter from 6.8 per cent in the prior three months, China’s statistics bureau said today. Government stockpiling of copper and expectations of a stronger demand stemming from the state’s 4 trillion-yuan ($585 billion) economic stimulus plan have helped the metal gain 56 per cent this year in London.
“Buying of commodities from China is part of this massive stimulus plan,” said Kevin Tuohy, a trader at MF Global Ltd. in London. “The purpose is to offset the economic slowdown.”
Copper for delivery in three months declined $39, or 0.8 per cent, to $4,780 a tonne on the London Metal Exchange. The metal has added 4.8 per cent this week, heading for a fifth straight climb.
Inventories in warehouses monitored by the LME dropped 1.1 per cent to 475,200 tonnes, the lowest since January 28. They fell 7.9 per cent last month on purchases from China. Some analysts view copper as an indicator of economic growth because of its use in plumbing and electrical wiring.
Aluminum for three-month delivery lost $17.25, or 1.1 per cent, to $1,497.75 a tonne. Tin slipped $50, or 0.4 per cent, to $11,300 a tonne.
LME metals jumped last month as some investors bought commodities in anticipation of a rebound in global economic growth. The exchange’s index of copper and five other industrial metals increased 11 per cent in March, the most in 13 months.
“The overriding factor has been the flow of money coming in,” Tuohy said.
Zinc added $8, or 0.5 per cent, to $1,528 a tonne. The amount of the metal scheduled to be withdrawn from LME-monitored warehouses jumped 32 per cent to 14,150 tonnes, exchange data today showed. Increases in so-called cancelled warrants may indicate stronger demand.
The three-month nickel contract declined $180, or 1.4 per cent, to $12,320 a tonne. Inventories rose for the first time since April 7, climbing 84 tonne to 105,348 tonne.
