Copper prices have hit a new weak spot after another round of lackluster data from China spooked investors, and analysts at Goldman Sachs don't anticipate an improvement.
The continued weakness in the red metal – seen as an economic bellwether because it's used in a wide range of products and industrial applications—came as data from China on Wednesday showed factory output slowed to a seven-month low of 5.6 percent in October, while investment expansion slipped to the weakest pace since 2000.
Three-month copper futures on the London Metal Exchange traded around $4,930 a ton in Asian hours Thursday, higher than its last settlement but near this year's bottom of $4,855 a ton. The year-low, hit in August, was the metal's weakest since July 2009. Prices have fallen over 20 percent since the beginning of 2015.
And, as with many other commodities, copper's story is not encouraging despite an earlier slowdown in supply growth, because output from previous investment will come on-stream just as cuts in consumption bite.
Goldman Sachs said in a report Wednesday that five major mines would start up or expand output significantly through 2016 and 2017, underpinning a forecast acceleration in mine supply growth of least 3 percent over the two years. Supply growth is just at 1 percent in 2015 on the back of low prices.
"Ongoing price weakness, in spite of price-related output cuts, is consistent with our view that producers do not move markets into deficit by cutting supply...rather they move markets closer to balance (than they otherwise would be)," Goldman Sachs' analysts wrote.
To move into a supply deficit - which would help prices - the market needed to see some recovery in demand and discipline in supply management, Goldman added.