Copper Hits One-Week Low After Weak China Data

Sep 20, 2012 (Dow Jones) NEW YORK--A weak reading on manufacturing activity in top metals consumer China pushed copper futures to a one-week low on Thursday.

The most actively traded copper contract, for December delivery, settled down 5.5 cents, or 1.4%, at $3.759 a pound on the Comex division of the New York Mercantile Exchange.

Copper had gained along with stocks and other commodities last week, rising 5.3% as the Federal Reserve announced plans to buy bonds in an effort to stoke U.S. economic activity. But the euphoria subsided this week, as the focus returned to Europe's banking crisis and some downbeat global economic data. Copper has settled lower in three of four sessions this week.

HSBC's preliminary reading on Chinese manufacturing activity, released Thursday, showed the sector remained in contraction in September, the 11th consecutive month of shrinking activity in the world's No. 2 economy. HSBC's China Manufacturing Purchasing Managers Index stood at 47.8 in September, compared with 47.6 in August. Readings below 50 indicate contraction.

Thursday's report, as well as similarly downbeat data on Japan, "reminded the bulls that all is not well," RBC Capital Markets said in a note.

China accounts for about 40% of world copper consumption, making the global market sensitive to even modest shifts there. In addition, copper tends to react quickly to changes to the economic outlook because of its use in a wide range of products, including automobiles, electrical wiring and piping.

Metal consumers in China have kept inventories low, analysts said, because of concerns about the health of the country's exports as European markets slump and U.S. growth slows.

Copper settlements (ranges include electronic and pit trading):
Sep $3.7725; down 5.65 cents; Range $3.7575-$3.8155
Dec $3.7590; down 5.50 cents; Range $3.7335-$3.8080