Copper Slumps Ahead Of China Data On Growth Fears

Jul 12, 2012 (Dow Jones) NEW YORK--Copper futures fell on Thursday, tracking global economic gloom as investors digested recent central bank news and looked ahead to economic data from China expected to show growth in the world's top copper consumer slowed in the second quarter. 

Copper for September delivery, the most actively traded contract, fell 3.25 cents, or 0.9%, to settle at $3.415 a pound on the Comex division of the New York Mercantile Exchange.

Copper retreat Thursday came in step with the euro as the European common currency touched a two-year low against the dollar on worries that world policymakers weren't taking firm enough steps to prop up growth. Investors Wednesday didn't see firm hints of new stimulative action from the Federal Reserve in the minutes from the U.S. central bank's latest meeting.

On Thursday, The Bank of Korea cut interest rates, underlining concerns about intensifying risks to Asian growth. A reading on Australian employment disappointed.

"Metal prices have followed the general market lower," traders with RBC Capital Markets said in a note, "reacting to Asia concerns and trepidation [toward] tomorrow's GDP data out of China."

Traders were concerned that a reading on China's growth, official gross-domestic product data due Friday, would show continued struggles in the world's top metals consumer. Economists expect China's growth in the second quarter to come in at the lowest rate since early 2009.

Slowing Chinese demand for industrial materials currently presents a major obstacle to higher prices, said Barclays analyst Gayle Berry. "Prices will be unable to break out on the upside until we seen an improvement in Chinese metal consumption and people stop worrying so much about the macro environment," she said.

Barclays on Thursday became the latest bank to cut its copper-price forecast as concerns over the global economy mounted. Barclays cut its 2012 average forecast by 6% to $3.68 a pound.

RBS, Credit Suisse, UBS and Bank of America Merrill Lynch all cut their copper-price forecasts this week. BNP Paribas and Goldman Sachs slashed their outlooks last month.

Copper settlements (ranges include electronic and pit trading):
Jul $3.4115; down 3.15 cents; Range $3.3840-$3.4210
Sep $3.4150; down 3.25 cents; Range $3.3845-$3.4390