Copper prices fall on demand risks Font Size: Decrease Increase Print Page: Print November 23, 2007
COPPER fell to an eight-month low overnight, before consumer buying crept in, and analysts said rising inventories and persistent demand woes looked set to cap any gains.
European shares rose higher with Britain's FTSE 100 index gaining 1.4 per cent but London-listed miners failed to catch up as choppy commodity prices weighed on stocks. BHP Billiton and Anglo American were down around half a per cent.
Copper for delivery in three months firmed $US45 to $US6,565 per tonne as consumers were attracted by the lower prices. Earlier, copper dipped to $US6,430, a new eight-month low and only $US100 higher than in January this year.
But the near-term bearish picture remained intact.
“It is pretty hard to find a catalyst,” analyst Michael Jansen at JP Morgan said. “The only major positive point here is the market's hugely oversold.”
In the previous session, the FTSEurofirst 300 index fell 2.48 per cent and the index has lost more than 11 per cent since it hit a record high in July as a credit crisis, stemming from problems in the US housing market, took its toll.
This week three-months copper has shed over 8 per cent and the metal is down nearly 20 per cent since October 22.
“The metals look weak and will probably remain that way for the next couple of months,” UBS commodity analyst Daniel Brebner said.
“Equities are sinking quite strongly, reflecting what is going on in the metals - a real concern in respect to global growth, liquidity and the credit markets.”
A slowdown in the US economy would be negative for base metals as it would hit demand from the construction sector.
“We need to see material disappearing from warrant to get out of this falling trend,” an LME trader said.
Stocks in LME warehouses rose another 2,800 tonnes to 185,500 tonnes, equalling more than 3.5 days of global consumption and nearly double the levels seen in mid-July. This week stocks have risen by nearly 5,000 tonnes.
“Copper will likely lead the complex even lower as long as US economic sentiment remains bruised, bringing most prices back to levels not seen since at least the beginning of the year,” a Deutsche Bank report said.
But the investment bank said lower prices provided good buying opportunities across the complex as Deutsche's economist had yet to forecast a full-bore recession. Instead, the bank forecast a more restrained slowdown in the US economy in 2008.
China's refined copper imports fell 3.8 per cent in October from the previous month, as higher domestic production and credit curbs hurt demand for inflows, and lower imports are expected in November.
“Going forward, imports of refined copper are likely to weaken due to oversupply in the domestic market, while exports of aluminium, lead and zinc could pick up ahead of the year-end,” a UBS daily report said.
LME zinc turned lower after hitting an intraday high of $US2,284.5, up 2.9 per cent. It closed flat at $US2,220, after sliding 6 per cent in Wednesday's session. Zinc prices are down some 30 per cent since the beginning of October.
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Copper falls on demand risks
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Posted - 11/24/2007 : 17:52:14
