Shanghai Copper Plunges to Six-Month Low on Demand Speculation

By Glenys Sim

Aug. 5 (Bloomberg) -- Copper futures in Shanghai plunged to the lowest in more than six months as global stockpiles rose to a five-month high, raising speculation demand may be slowing.

Copper inventories monitored by the London Metal Exchange climbed for a 16th day to 146,200 metric tons yesterday, the highest since Feb. 27. Stockpiles have risen 19 percent in the past month.

``The sharp decline seen in the metals complex, in the absence of any notable strengthening of the dollar, speaks of a market that is increasingly concerned about the outlook for global growth,'' Darren Gibbs, chief economist at Deutsche Bank AG in Auckland, wrote in a report today.

October-delivery copper lost as much as 1,670 yuan, or 2.7 percent, to 59,350 yuan ($8,660) a metric ton on the Shanghai Futures Exchange, the lowest for a most-active contract since January 28. This is also the biggest intra-day drop since April 14. The contract traded at 59,660 yuan at 10:50 a.m. Singapore time, falling below 60,000 yuan for the first time since June 13.

Copper for delivery in three months rose 0.9 percent to $7,670 a ton on the London Metal Exchange at the same time, after falling to a six-month low yesterday.

Prices were also pulled lower by a slump in the commodities complex. Plunging prices for cocoa, natural gas and sugar sent the Reuters/Jefferies CRB Index of 19 commodities to its biggest one-day drop since March. Crude oil dropped below $120 a barrel for the first time since May 6 yesterday.

``Commodity prices now seem to be in the process of reverting to levels that are less growth-inhibiting for the major industrial economies,'' wrote Gibbs.

Among other LME-traded metals, aluminum rose 0.3 percent to $2,890 a ton, zinc was up 0.7 percent at $1,780, and lead added 0.8 percent to $2,010. Nickel and tin had not traded as of 10:55 a.m. in Singapore.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net