Copper wiped out a fortnight of gains in London as industrial metals sank after two gauges of manufacturing in China showed factory activity in the world's biggest metals consumer contracted again. Nickel and zinc both slumped more than three per cent.
Copper dropped as much as 2.3 per cent to $4,597 a metric tonne, before trading at $4,601 a tonne at 4 pm in Shanghai, below the metal's close on December 18. On the Shanghai Futures Exchange, the metal closed down 1.5 per cent, while China's biggest copper producers Jiangxi Copper Co Ltd and Tongling Nonferrous Metals Group Co sank more than nine per cent amid a rout in Shanghai stocks that forced a trading halt.
China's official purchasing managers index edged up to 49.7 for December, according to data released Friday. That was the fifth month below the 50 mark that signals a decrease in factory activity, signaling that the demand slowdown that battered metals last year may extend into 2016. A separate private index of manufacturing out Monday also showed a decline, posting a weaker-than expected level of 48.2.
"Demand is lacking," Dominic Schnider, head of commodities and Asia-Pacific foreign exchange for UBS Group AG's wealth management unit in Hong Kong, said in a Bloomberg TV interview.
"Even if you did take down capacity, the problem is on the demand side. As long as we don't see a big pick-up, the situation is almost all the metals will remain under pressure, in particular copper."
Copper may test $4,200 a ton, Schnider said. All metals fell in London, with nickel down 3 percent after an earlier slump of 3.4 percent. Zinc dropped 2.9 percent, paring a 3.5 percent loss.
