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| Copper declines in Asia amidst renewed concern about economy |
| Bloomberg / Bloomberg Apr 09, 2009, 00:08 IST |
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Copper declined in Asia as some investors deemed the recent climb to a five-month high as excessive amid the renewed concern about financial crisis.
Futures also fell after a rebound in global equities faltered as the credit crisis hurt companies’ earnings. Copper, the best performer on the London Metal Exchange, has rallied 40 per cent this year on speculation the worst of the global recession has passed.
“Data related to consumption of industrial commodities lead us to believe that the worst time for China’s demand may have passed, though we still believe that an immediate, strong rebound is unlikely,” Standard Chartered Plc’s Shanghai-based analyst Judy Zhu, wrote in a report e-mailed today.
Copper for three-month delivery in London dropped as much as 2 per cent to $4,291 a tonne and traded at $4,303 a tonne, Singapore time. The metal gained to $4,459 a ton on April 6, the highest since October 30.
Investor George Soros said this week that “we have not yet turned the economy around,” referring to the rebound in stocks since March 9. The MSCI Asia-Pacific Index lost 2.5 percent today, declining for a second day.
July-delivery copper on the Shanghai Futures Exchange gained 0.8 percent to 35,510 yuan ($5,194) a ton.
China’s 4 trillion yuan ($585 billion) stimulus package is taking effect as manufacturing expanded in March for the first time in six months, while urban fixed-asset investment jumped 26.5 percent in the first two months from a year earlier.
Still, “it is premature to predict a sharp recovery in demand at this stage, as we are unsure about how sustainable these figures are,” said Zhu.
“Also, inventories of many metals, while they have begun to fall slightly, remain high.”
Inventories tallied by the London Metal Exchange fell for the second time in three days to 501,900 tonnes yesterday. Still, stockpiles are 48 percent above their levels at the start of the year and are more than four times those of a year ago.
Base metals also dropped as the dollar index, a measure of the greenback against six major currencies, rose for a third day, gaining 1.7 percent in the period. A stronger dollar dims demand for commodities.
Among other LME-traded metals, aluminum fell 1 percent to $1,460 a ton, lead lost 2.2 per cent to $1,305 a ton, and nickel slid 1.7 per cent to $10,718 a tonne. Zinc dropped 1.7 per cent to $1,332 a tonne, while tin lost 1.8 per cent to $10,700 a tonne.
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