BLBG: Copper Heads for First Weekly Drop in Six as Slump Cuts Demand
Copper headed for its first weekly decline in six amid renewed concern the global recession will further cut demand for the metal used in construction and cars.
General Motors Corp., the largest U.S. automaker, said yesterday it will idle 13 assembly plants in the country for multiple weeks to trim inventory after sales in its home market fell 49 percent this year through March. Sales of existing U.S. homes fell in March to an annual rate of 4.57 million, compared with economists’ forecasts for 4.65 million.
“The U.S. economic numbers have failed to confirm the more optimistic tone evident in base metals markets at times in recent weeks,” David Moore, chief commodity strategist at Commonwealth Bank of Australia, said in an e-mail today.
Copper for three-month delivery on the London Metal Exchange fell 0.2 percent to $4,335 a metric ton at 10:04 a.m. Singapore time, taking its weekly decline to 9.8 percent.
The global recession has forced the world’s biggest carmaker Toyota Motor Corp., and other Japanese automakers to cut jobs and production, while Detroit automakers General Motors and Chrysler LLC have turned to the U.S. government for aid.
Copper is often used as an indicator for the world economy and may set the pace for other base metals because an average of 50 pounds is used in cars and 400 pounds (181 kilograms) in homes, according to the Copper Development Association. Builders are the largest users of copper in the U.S., the second-largest consumer behind China.
Among other LME metals, aluminum gained 0.4 percent at $1,454 a ton, zinc fell 0.5 percent to $1,410 a ton and nickel dropped 1.3 percent to $11,200 a ton. Lead and tin hadn’t traded at 10:09 a.m. Singapore time.
Shanghai Drops
August-delivery copper on the Shanghai Futures Exchange lost as much as 3.9 percent to 35,180 yuan ($5,152) a ton, before trading at 35,300 yuan.
The Shanghai Futures Exchange will temporarily lift margin requirements to 9 percent and widen daily trading limits to 6 percent on trading days before and after an upcoming holiday to prevent volatility.
Margins and limits for copper, aluminum, zinc, natural rubber, fuel oil, gold, steel reinforcement bars and steel wire futures will be raised on April 30, the last day of trade before the Labor Day vacation, the exchange said in a statement on its Web site. The limits will return to normal at the end of trade on May 4, the first day back after the holiday.
