(Bloomberg) -- Most base metals dropped on further signs of soft Chinese demand, following disappointing growth data.
Asia’s largest economy grew 4.7% in the second quarter from a year earlier, the slowest pace in five quarters, falling short of the median estimate of 5.1% in a Bloomberg survey of economists. The miss in Chinese GDP puts pressure on Beijing to take steps to boost confidence ahead of the third plenum, where policymakers will discuss the long-term economic direction.
“The corollary to this is that less economic activity implies weaker demand,” which “ultimately means that the market gets relatively oversupplied,” said Bart Melek, managing director and commodity strategist at the Toronto Dominion Bank.
Chinese aluminum output climbed to a record high for a second straight month on elevated refining margins, according to data released Monday. Aluminum stocks on Shanghai Futures Exchange also rose, another indicator of an oversupplied market.
The price of aluminum fell to a three-month low on the London Metal Exchange, before erasing those losses. The lightweight metal has been in retreat since late May on weak Chinese demand, partially due to a prolonged slump in the country’s property sector.
Chinese home prices fell again in June, underscoring the challenge for policymakers to arrest a slowdown that’s hurt demand for metals like iron ore, aluminum, copper and zinc. Copper has seen weekly declines on the LME for seven of the last eight weeks.
Base metals also came under pressure as the dollar strengthened following an assassination attempt on Republican presidential contender Donald Trump over the weekend.
Copper and aluminum fell 0.7% on the LME as of 5:00 p.m. local time. Nickel was down 0.5% and zinc rose 0.4%.
--With assistance from Audrey Wan.
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