BLBG: Copper Falls for Second Day on Concern Over U.S. Contraction
Copper and nickel slid for a second day in London as reports showed the U.S. recession may be deepening, curbing demand for industrial metals.
Copper has dropped more than 60 percent since the beginning of July as a worsening housing market in the U.S. crimped demand for the metal used in pipes and wiring. U.S. crude oil inventories jumped more than expected to the highest since May and companies pared 693,000 jobs in December, also exceeding economists’ forecasts, reports showed yesterday.
“Fairly poor data for U.S. employment and the latest U.S. inventory data reaffirm weakness in the economy,” said Dan Smith, an analyst at Standard Chartered Plc in London.
Copper for delivery in three months fell $100, or 3 percent, to $3,240 a metric ton as of 11:21 a.m. on the London Metal Exchange. It declined 1.5 percent yesterday. The Comex March- delivery copper contract fell 2.4 percent to $1.475 a pound.
Nickel, which is used in stainless steel, declined $350, or 2.9 percent, to $11,950 a ton.
Nickel jumped as much as 13 percent this year and copper climbed to a one-month high on speculation government spending programs will revive economies, spurring consumption of homes, cars and other items that contain industrial metals.
Buying by index funds that helped support nickel prices as they rebalance their holdings provided an opportunity for other investors to sell inventory, Smith said. Nickel may drop to less than $10,000 a ton in the next few weeks, he said.
The UBS Bloomberg CMCI Index of 26 commodities dropped 4.2 percent yesterday, the first drop this year.
Jobs Woe
“Improvement in sentiment disappeared fairly quickly,” Smith said.
The number of Americans filing first-time claims for unemployment benefits probably rose to 545,000 in the week ended Jan. 3 from 492,000 a week earlier, economists said in a Bloomberg News survey. The report is set for release at 8:30 a.m. in Washington.
Tin fell $400 to $11,200 a ton, zinc dropped $34 to $1,256 a ton and aluminum declined $28 to $1,566 a ton. Lead rose $10 to $1,150 a ton.
