Tags: copper | price | metal | growth

Copper Heads for Bear Market Amid Concern Growth Is Faltering

Thursday, 18 Apr 2013 10:39 AM

Copper fell in New York, dropping below $3.10 a pound for the first time since October 2011, amid concern slowing economic growth from China to the U.S. will curb demand for industrial metals.

Copper for delivery in July slumped as much as 4.1 percent to $3.07 a pound on the Comex in New York, the lowest since Oct. 20, 2011. A close under $3.1828 would be 20 percent below the February 2012 peak, deemed a bear market by many investors. Tin headed for a bear market in London.

Copper slid 13 percent this year as ample supply, signaled by a near-doubling of stockpiles tracked by the LME, caught up with demand. Growth in China, the world’s biggest copper consumer, missed estimates last quarter as industrial output and fixed-asset investment fell short of forecasts. The International Monetary Fund cut its world growth forecast this week and an index of U.S. leading indicators showed the world’s largest economy is slowing, according to economists.

“The macro environment remains negative,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, said by phone. “There is a lot of copper in inventories. There is no reason for buyers to step in aggressively yet.”

Supply of the metal used in pipes and wiring will top demand by 97,000 tons this year as mines boost output, near the 102,000-ton excess in 2012, according to Barclays Plc. The copper market was in surplus by 129,000 tons in 2013’s first two months, the World Bureau of Metal Statistics said, against a year-earlier, 67,500-ton shortage.

Tin, Nickel

Copper for delivery in July lost 0.4 percent to $3.1905 a pound by 8:40 a.m. on the Comex in New York and the metal for delivery in three months dropped 0.7 percent to $7,030 a ton on the LME. Tin fell 0.5 percent to $20,300 a ton, compared with the high of $25,500 in February 2012. Nickel, zinc, aluminum and lead climbed.

The LME Index of the six main metals traded on the exchange, updated daily based on closing prices, was 19 percent below the high reached in February 2012. Mining companies including Rio Tinto Group, the world’s second-biggest, account for six of this year’s 10 biggest declines in the U.K. benchmark FTSE 100 Index.

“The realization of slower economic growth from China makes people worry more about the sustainability of copper prices above $7,500” a ton, Guillaume Osouf, a broker at Triland Metals Ltd. in London, said by e-mail. The break of $7,000 was “technical,” he said.

Auto Sales

Economic expansion in the U.S., the second-biggest copper consumer, remains “moderate,” the Federal Reserve said this week in its Beige Book business survey, while European car sales headed for a 20-year low as demand plunged in Germany. The International Copper Study Group says an average midsize auto contains about 50 pounds of the metal.

China International Capital Corp., the nation’s largest investment bank, cut price forecasts for industrial metals in 2013 and 2014, citing slower-than-expected demand growth in the country. Copper demand will climb 3.8 percent this year, RBC Capital Markets said, lowering its forecast from 5.3 percent.

Copper stockpiles tracked by the LME rose 0.6 percent to 612,350 tons, daily exchange figures showed. Inventories are the highest since September 2003.

The metal may fall to $6,500 in the next few weeks, according to Marex Spectron’s Wolf. The firm turned bearish on risk assets such as industrial metals in February.

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Copper fell in New York, dropping below $3.10 a pound for the first time since October 2011, amid concern slowing economic growth from China to the U.S. will curb demand for industrial metals.Copper for delivery in July slumped as much as 4.1 percent to $3.07 a pound on the...
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Thursday, 18 Apr 2013 10:39 AM
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