Metals News
Copper Drops From 14-Month High on Speculation Demand Will Slip
smm insight
01:16PM
Dec 7,2009
Source:SMM

LONDON, Dec. 4 -- Copper fell from the highest price in 14 months after a report showed U.S. service industries unexpectedly contracted last month, spurring speculation that the global economy will be slow to rebound.

    An index of non-manufacturing businesses, which make up almost 90 percent of the U.S. economy, fell to 48.7, indicating a contraction in November, the Institute for Supply Management said today. Economists had forecast expansion. Copper gained 7.5 percent last month as a weakening dollar boosted demand for commodities as alternative investments.

    "The copper price is far outpacing where demand really is," said Matthew Zeman, a LaSalle Futures Group trader in Chicago. "I wouldn't be surprised to see it continue to drop."

    Copper for March delivery fell 1.35 cents, or 0.4 percent, to $3.245 a pound on the New York Mercantile Exchange's Comex unit. Earlier, the most-active contract reached $3.2745, the highest price since Sept. 23, 2008.

    Inventories in warehouses monitored by the London Metal Exchange increased for a 23rd day, reaching the largest amount since April.

    Shipments into China, the world's biggest copper user, declined in October for the third time in four months. Futures have more than doubled this year as China's imports climbed to a record in the first half.

    Growth Outlook

    Globally, "it is unclear whether growth will be strong enough to offset slowing Chinese offtake," Fraser Phillips, an RBC Capital Markets analyst in Toronto, said today in a report.

    Copper-mining companies will struggle to meet demand as China's appetite for the metal rises, according to Xstrata Plc, the world's fourth-biggest copper supplier.

    "We're seeing real consumption growth in China," Charlie Sartain, the chief executive officer of Xstrata's copper unit, said today in London. "That gives us confidence about the market."

    On the LME, copper for delivery in three months fell $45, or 0.6 percent, to $7,080 a metric ton ($3.21 a pound). Among other LME metals for three-month delivery, nickel, aluminum, lead, tin and zinc dropped.

    (Source: Bloomberg)

 

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