BS: Copper Heads for Biggest Weekly Drop Since January in London
By Anna Stablum
May 7 (Bloomberg) -- Copper fell in London, heading for the biggest weekly drop since January, on concern that Greece’s debt crisis may spread. Nickel was on course for its worst one-week performance since October 2008.
The Group of Seven plans to hold a conference call today to discuss the crisis, according to Japanese Finance Minister Naoto Kan. That signals finance chiefs from the most-developed nations may see escalating risks from Greece to the global economic recovery. Concern about the crisis helped U.S. equities to tumble the most in a year yesterday.
“The key concern is if the problems in Greece are going to spread,” said Dan Smith, an analyst at Standard Chartered Plc in London. “If you have a problem in Greece, that can impact European banks, which hold Greek bonds. Therefore, you get this knock-on effect.”
Copper for delivery in three months fell $51, or 0.7 percent, to $6,897 a metric ton at 12:01 p.m. on the London Metal Exchange. The contract has dropped 7.2 percent this week, the most since the week ended Jan. 29. Futures for July delivery slipped 0.1 percent to $3.12 a pound on the Comex in New York, falling for a fifth day.
Prices slid even as the U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell for the first day this week. A weaker dollar makes metals priced in the currency cheaper in terms of other monies. The index is still up 3.4 percent this week after two straight weekly advances.
Greek Bailout
The euro has lost 11 percent against the dollar this year on concern a 110 billion-euro ($142 billion) bailout for Greece is too little to calm markets and keep the crisis from spreading. Europe consumes 20 percent of global copper output and 15 percent to 25 percent of aluminum, zinc, nickel and lead production, according to Barclays Capital.
The U.S. Dow Jones Industrial Average yesterday tumbled as much as 9.2 percent, or 998.50 points, before rebounding to close 3.2 percent lower. The intraday decline was the biggest percentage loss during a session since 1987 and largest point drop ever.
“The panic has been overblown,” Standard Chartered’s Smith said. “I don’t think it is taking into account that things are generally improving and most likely this will all blow over.”
Reports this week showed that U.S. factory orders unexpectedly rose in March and sales climbed the most since November 2007, while the number of Americans filing claims for jobless benefits last week dropped to the lowest level in a month. Personal spending climbed the most in five months in March as incomes increased for the first time this year.
U.S. Employment
A report due at 1:30 p.m. London time today is expected by economists to show that U.S. employers added to payrolls for the third time in four months in April.
Nickel for three-month delivery on the LME rose 0.7 percent to $22,200 a ton, rebounding from a decline of as much as 4.1 percent. The contract touched $20,450 yesterday, the lowest level since Feb. 26. The metal, mainly used in stainless steel, has tumbled 16 percent this week.
“In the medium term, fundamentals do not look very positive, as there is potential of a large supply response,” Standard Chartered’s Smith said.
Nickel’s market open interest, or outstanding contracts, declined 5.8 percent from this year’s peak to 135,780 lots as of May 5, according to LME data. Each contract represents 6 tons.
Copper Inventories
Inventories of copper tracked by the LME fell for a ninth day, slipping 0.4 percent to 490,875 tons, the lowest level since Dec. 29. Stockpiles dropped in March and April. Bookings to remove metal from warehouses slid for an eighth day, declining 7.6 percent to 18,050 tons.
Copper stockpiles in Shanghai fell 8,301 tons to 181,140 tons this week, the bourse said on its website today.
Aluminum was little changed at $2,102 a ton, after reaching $2,050, the lowest since Feb. 15.
Tin dropped 1 percent to $17,525 a ton, after touching $17,000, the lowest intraday price since March 3.
LME-monitored tin stockpiles dropped for a sixth consecutive week, down 0.9 percent to 20,940 tons. One party holds 50 percent to 79 percent of the LME inventories, LME data from May 5 show. On the futures market, one holder accounts for at least 40 percent of short positions, or bets on lower prices, expiring in May, the latest LME data from May 5 show. The biggest bet on a price gain expiring in the same month accounted for more than 40 percent of the total.
Lead rose 0.5 percent to $2,010 a ton and zinc slid 1 percent to $2,092 a ton.
--With assistance from Timothy R. Homan and Shobhana Chandra in Washington, Mayumi Otsuma and Kyoko Shimodoi in Tokyo, and Darren Boey in Hong Kong. Editors: Dan Weeks, Stuart Wallace.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net.
