Copper prices dropped to their lowest in 1-1/2 years on Thursday after Apple blamed slowing iPhone sales on China, reinforcing expectations of slowing economic and demand growth in the top consumer of industrial metals.
Benchmark copper on the London Metal Exchange ended down 1.8 percent at $5,736 a tonne.
Prices of the metal used widely in power and construction earlier touched $5,725, the lowest since June 2017, as U.S. funds sold after the New York open on worries about growth in both China and the United States.
Apple on Wednesday cut its quarterly sales forecast, blaming sales in China, where growth has been curbed by a trade dispute with the United States.
“Apple had already cut their forecasts and there have been clues from companies that supply them. They’ve confirmed the slowdown in Chinese consumption,” said Kash Kamal, an associate at BMO Capital Markets.
“China’s manufacturing sector remains an area of concern, while industrial profits are now barely positive, raising disinflationary concerns.”
GROWTH: China’s economic growth could fall below 6.5 percent in the fourth quarter as companies face increased difficulties, a central bank magazine said on Wednesday.
MANUFACTURING: China’s factory activity contracted for the first time in 19 months in December as domestic and export orders weakened further.
The Caixin/Markit Manufacturing Purchasing Managers’ Index for December fell to 49.7 from 50.2 in November, marking the first contraction since May 2017. Manufacturing is a key source of jobs in China’s economy.
CONSUMPTION: China accounts for half of global copper consumption estimated at 24 million tonnes this year.
SUPPORT: China will ratchet up support for the economy this year by cutting taxes and keeping liquidity ample, the official Xinhua news agency said after an annual meeting of Chinese leaders and policymakers.
The government has launched a number of measures, including reductions in reserve requirements for banks, tax cuts and more infrastructure spending, to ward off sharp growth deceleration. Further policy steps are expected.
U.S. DATA: Traders said weaker than expected weekly jobs and manufacturing data from the United States helped fuel momentum for the copper price sell-off.
The United States accounts for about eight percent of global copper consumption.
“Apple’s sales news also means any lingering thoughts about the U.S. economy being immune to the global economy will be laid to rest,” a trader at a Swiss-based fund manager said. “The break below $5,800 triggered the sell-off this afternoon.”
PRICES: Aluminium was up 2.1 percent at $1,835, zinc fell 1.2 percent to $2,379, lead fell 1.1 percent to $1,933, tin gained 0.5 percent to $19,570 and nickel firmed to $10,875.