Copper, aluminium decline on speculation

Print this page Posted on : 01-21-2009 by recycleinme.com

Bloomberg

Jan. 20

Copper, aluminium and nickel led declines in industrial metals in London on speculation that demand will weaken as the US housing slump worsens.

US housing starts and permits to begin building probably dropped to record lows last month, economists said in Bloomberg surveys before the Commerce Department report in two days. Construction is the biggest use for copper in the US, and prices slid 54 per cent last year as the American recession reduced home buying.

The big influence now is the outlook for economic growth, said Mr Peter Fertig, a consultant for Dresdner Kleinwort in Hainburg, Germany. The continued fall of housing starts in December might remain a burden for copper in the short run.

Copper for delivery in three months on the London Metal Exchange dropped $170, or 5 per cent, to $3,260 a tonne as of 10:54 a.m. local time. That's the biggest intraday decline since Jan. 12. Aluminium fell $35, or 2.5 per cent, to $1,388 a ton. The contract earlier reached $1,370, the lowest since July 2003.

With energy accounting for 40 per cent of aluminium production costs, and oil futures down 25 per cent this year, some analysts fear that aluminium supply would not decline sufficiently, Mr Fertig said, forecasting prices may drop to $1,350 in the next two weeks.

Stocks up

Inventories of copper in warehouses monitored by the exchange jumped 3.9 per cent to 409,100 tonnes, the highest since January 2004. Aluminium stockpiles gained 0.6 per cent to almost 2.6 million tonnes, the most since July 1994.

Lead declined 3.2 per cent to $1,147 a tonne, nickel retreated 3.5 per cent to $10,900 a tonne and zinc fell 4.3 per cent to $1,215 a tonne. Tin decreased 3.1 percent to $10,800 a ton.

Lead inventories jumped 9.2 per cent to 49,700 tonnes, the biggest increase in a year.

Source : Business Line