Sept. 5 (Bloomberg) –Sterlite Industries (India) Ltd., the nation"s biggest copper producer, cut prices for the first time in three months on expectation of slowing global demand and following a decline in prices on the London Metal Exchange.
The unit of Vedanta Resources Plc (VED) reduced prices by 4.6 percent to 445,409 rupees ($9,700) a metric ton, effective Sept. 1, according to a statement posted today on the company"s website. Shares of Sterlite, which sets prices each month based on the average London Metal Exchange price the previous month, slumped to the lowest in more than two weeks.
Copper averaged 3.9 percent lower at $9,275 a ton in August on the LME. Morgan Stanley and Deutsche Bank AG last month cut the estimate for China"s gross domestic product growth in 2012 to 8.7 percent and 8.9 percent respectively, citing the effects of weaker growth in the U.S. and Europe. China and the U.S. are the top copper consumers.
"Both Europe and U.S. have problems, which have started to affect copper prices," said Basant Vaid, a senior analyst at Bonanza Commodity Brokers Ltd. in Mumbai. "Even though the supplies are less than demand at present, a slowdown in the West may lead to a drop in demand and reduce the mismatch."
Tuticorin, Tamil Nadu-based Sterlite dropped as much as 2.7 percent to 130.45 rupees, the most since Aug. 18, and traded at 131.30 rupees as of 10:46 a.m. in Mumbai. The benchmark Sensitive Index fell 1.1 percent.
Three-month copper fell as much as 0.5 percent to $9,030 a ton in London and traded at $9,041.75 a ton by 1:19 p.m. Singapore time. It rose as much as 0.4 percent earlier.
The U.S. Labor Department on Sept. 2 reported the weakest payrolls reading since September 2010. The Conference Board"s index of consumer confidence in the world"s second-largest copper user, slumped to 44.5, the weakest since April 2009.
It was the largest point drop since October 2008, falling from a revised 59.2 reading in July, figures from the New York- based research group showed Aug. 30. A separate report showed home prices declined for a ninth month.
Industrial production in Japan rose less than expected in July, signaling that the nation"s recovery from the March 11 earthquake and tsunami is losing momentum as the yen gains and overseas demand slows. In South Korea, industrial output expanded at the slowest pace in 10 months as weakness in global growth threatens the outlook for exports.