Bloomberg News

Nickel and Aluminum Drop as China Manufacturing Expansion Slows

February 25, 2013

Nickel extended the biggest weekly drop since 2011 in London and aluminum fell after figures showed manufacturing is expanding at the slowest pace in four months in China, the world’s largest consumer of the metals.

A Purchasing Managers’ Index gave a preliminary reading of 50.4 for February, a statement from HSBC Holdings Plc and Markit Economics showed today. That compared with January’s final level of 52.3. Voting stations close at 3 p.m. local time in Italy, where former Prime Minister Silvio Berlusconi has promised to overturn tax increases if he is returned to office.

“The majority of metal prices are continuing to show weakness,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. “Besides the restraint being exercised by market players on account of the Italian elections,” the Chinese gauge was “doubtless also weighing on sentiment,” he said.

Nickel for delivery in three months slid 0.8 percent to $16,832 a metric ton by 10 a.m. on the London Metal Exchange. Copper climbed 0.5 percent to $7,841 a ton after dropping the most since December 2011 last week and the metal for delivery in May rose 0.3 percent to $3.562 a pound on the Comex in New York.

Money managers reduced net-long positions, or wagers on rising copper prices, by 51 percent from a week earlier to 11,413 Comex futures and options contracts as of Feb. 19, according to the U.S. Commodity Futures Trading Commission.

Prices slid last week amid concern the Federal Reserve may vary the pace of stimulus in the world’s biggest economy. Data this week will show the Institute for Supply Management’s U.S. factory index stayed near a nine-month high in February, said economists surveyed by Bloomberg News.

“We see the recent pullback in the complex as a temporary one,” Michael Lewis, head of commodities research at Deutsche Bank AG in London, said in a report today.

Copper stockpiles monitored by the LME climbed for an eighth session to 430,725 tons, the highest level since Oct. 28, 2011, data showed today. Orders to remove the metal from warehouses were little changed at 27,800 tons.

Aluminum and zinc fell in London, tin rose and lead was little changed.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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