By Geoffrey Smith

Investing.com -- Base metals prices fell to new lows for the year on Friday after China's second quarter growth data fell short of expectations, prompting some to revise dome their outlooks for the rest of the year.

Copper futures in London fell below $7,000 a ton for the first time since November 2020 in early trading, before paring losses, while iron ore futures in Dalian, China, ended down 10% on the day, after the world's biggest consumer of both metals said its economy contracted 2.6% in the second quarter. That was well below expectations for a drop of 1.4% and left the annual rate of growth only just in positive territory, up 0.4%.

By 4:30 AM ET (0830 GMT), Copper Futures were down 1.9% at $6,991 a tone, while Nickel Futures were down 1.5%, and Aluminum Mini Futures were down 0.4%.

Base metals have sold off increasingly sharply in recent weeks as a global economic slowdown has grown more likely, due to Russia's invasion of Ukraine and the West's response to it. China's own economic problems - including a massive debt overhang in the real estate sector and its continued reliance on heavy-handed lockdowns to contain COVID-19 outbreaks have added to such fears.

The outlook for demand from the key real estate sector, which accounts for over 20% of Chinese GDP, is coming under fresh pressure due to a spreading boycott of mortgage payments by homebuyers, who are protesting developers' failure to deliver homes that have been sold in advance. With debt markets already closed to all but the strongest developers and new sales hampered by stop-start lockdowns across the country, the boycott is depriving many of what is their last reliable source of cash flow. Data released by the National Bureau of Statistics earlier showed that home prices fell for a 10th straight month in June, leaving many borrowers with debts that already exceed the value of their apartments - even if they are completed.

The rest of China's monthly economic data for June were hardly more encouraging: industrial production rebounded with less vigor than expected to be up only 3.9% on the year, although growth in investment in fixed assets was largely stable at 6.1%.

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