Copper futures have retreated in commodities trading markets today (July 25th), failing to build on the strong surge witnessed in the previous session.
After the HSBC flash purchasing managers' index yesterday indicated China's manufacturing activity increased by more than anticipated this month, the industrial metal advanced by 1.8 per cent.
Data relating to the Asian nation's economy generally tends to have a significant impact on a number of key commodities as it is the world's largest metals consumer.
This was again the case today, with demand for copper weakening following the release of updated growth forecasts from the International Monetary Fund (IMF).
In its latest report, the organisation downwardly-revised its estimate for China's full-year growth to 7.4 per cent, down from the 7.5 per cent prediction made in April.
Furthermore, the IMF said it now expects the world's second-largest economy to expand by 7.1 per cent in 2015. This is down from the previous forecast of 7.3 per cent.
The release of these figures has led to suggestions copper's recent rally, which had seen it advance by close to three per cent for the week, may have been overdone.
As a result, investors looked to book profits, causing the contract for delivery in three months to retreat by 0.3 per cent to $7,150 per metric tonne in early European trading on the London Metal Exchange.
Economist from Goldman Sachs expect global supply of copper to exceed demand by as much as 353,000 tonnes in 2014, with the surplus rising to 492,000 tonnes the following year. This has led the group to reduce its 12-month estimate for prices of the industrial metal from $6,600 per tonne to $6,2000 per tonne.
The vast majority of copper consumption in China is in the property market, but recent data has indicated a weakness in this area and Goldman speculates in an investors' note that this will reduced demand in the country and serve to drive prices lower over the coming months.