LONDON- Copper prices slumped on Friday after weak manufacturing data in top metals consumer China spurred funds to liquidate more bullish positions that helped send the market to a record last week.
Prices briefly rebounded in the European afternoon after data showed US inflation was steady, but the market soon went back into the red.
Three-month copper on the London Metal Exchange was down 0.9 percent to $10,048 a metric ton, having slipped nearly 10 percent since touching a record high of $11,104.50 on May 20.
China’s manufacturing activity fell unexpectedly in May as a protracted property crisis in the world’s second-largest economy continued to weigh on business, consumer and investor confidence.
The official manufacturing purchasing managers’ index (PMI) dropped to 49.5 in May from 50.4 in April, below the 50 mark that separates growth from contraction.
“The Chinese numbers, being so soft and coming in below 50, might be something that make people reassess their demand forecasts from China,” said Nitesh Shah, a commodity strategist at WisdomTree.
Traders said the selling was mainly by funds that had previously piled in and fueled the rally, which were now either taking profits or being squeezed as prices came down.
The weight of selling overcame optimism from in-line US inflation data that gave more confidence that the Federal Reserve may cut interest rates this year.
LME copper has added 0.5 percent this month and about 17 percent this year.
