BLBG:Copper Pares First Annual Drop Since 2008 on Improved U.S. Jobs, Home Data
Copper rose, trimming the first yearly decline since 2008, as better-than-expected U.S. data boosted confidence that a recovery in the second-largest consumer will support demand. Aluminum and zinc also advanced.
Copper for delivery in three months gained as much as 1.6 percent to $7,540 a metric ton on the London Metal Exchange, and traded at $7,510 at 4:22 p.m. Shanghai time. The contract has retreated 22 percent this year, after climbing to a record $10,190 a ton on Feb. 15.
The number of Americans filing claims for jobless benefits dropped to 375,000 on average over the past four weeks, the fewest since June 2008, while the U.S. Chicago Purchasing Managers Index and pending sales of existing homes both surpassed the median estimate of economists surveyed by Bloomberg News.
“The optimism over copper based on tight supply wasn’t able to last after the sovereign debt crisis in Europe exploded,” Wang Zhouyi, an analyst at Shanghai CIFCO Futures Co., said by phone. “Copper may slide further as we enter 2012, and whether it’ll find support depends on how the problems in Europe can be effectively addressed and whether the employment market in the U.S. will improve.”
The LME Index (LMEX) of six primary metals has dropped 23 percent this year, the first decline since 2008. Tin is the worst performer, losing 30 percent, while aluminum dropped the least at 19 percent. The MSCI All Country World Index has declined 9.6 percent amid concern Europe’s crisis will drag the global economy into recession.
Europe Risk
“The risk in moving into 2012 is what will happen to Europe in particular,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “Some kind of major events there could put more pressure on the market from a sentiment perspective.”
Copper may have a “decent recovery” in the second half on tight supplies and improving economic conditions, he said.
Global inventories (LSCA) monitored by exchanges in London, New York and Shanghai fell 4.3 percent this year, data compiled by Bloomberg show.
Copper for delivery in March on the Shanghai Futures Exchange closed 2.1 percent higher at 55,360 yuan ($8,787) per ton. March-delivery copper traded 1.4 percent higher at $3.4170 per pound on the Comex in New York.
A purchasing manager index released by HSBC Holdings Plc and Markit Economics today showed that manufacturing in China, the world’s largest metals user, contracted for a second month. The reading was 48.7 for December, up from 47.7 in November. A reading above 50 indicates expansion. China will release its official PMI on Jan. 1.
“Some companies have said the situation in China seemed to be even worse than 2008,” said Wang of CIFCO Futures. “As the monetary policy remains prudent, it would be difficult to see a strong rally.”
On the LME, aluminum rose 0.6 percent to $2,002.50 a ton, zinc climbed 1.4 percent to $1,858 a ton and lead gained 0.6 percent to $2,010 a ton. Nickel advanced 1 percent to $18,381 a ton and tin rose 0.4 percent to $18,875 a ton.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
