Shanghai Copper Below 30,000 Yuan for First Time Since 2005

By Glenys Sim

Nov. 7 (Bloomberg) -- Copper slumped by the exchange- imposed daily limit in Shanghai, poised for a fifth weekly decline, amid signs a global economic slowdown is damping demand for raw materials as stockpiles expand.

Inventories monitored by the London Metal Exchange climbed to 252,550 metric tons yesterday, the most since March 10, 2004. The metal used in wires and pipes is down 5.2 percent this week as supplies have increased 9.5 percent.

``There's still room to fall, we're not at the bottom yet,'' said Yuan Fang, a trader at Shanghai East Asia Futures Co. ``The rate cuts around the world are now getting people worried that things may be worse than they thought.''

Copper for January delivery on the Shanghai Futures Exchange fell by 1,560 yuan, or 5 percent, from the previous settlement price, to 29,540 yuan ($4,327) a metric ton when the exchange opened for trading at 9 a.m. local time. This is the first time a most-active contract has fallen below 30,000 yuan since June 2005.

Copper for delivery in three months on the London Metal Exchange lost as much as 7.5 percent to $3,765 a ton yesterday and dropped 1.3 percent to $3,755 at 10:20 a.m. Singapore time. The metal is down 7.9 percent this week, erasing most of last week's 8.7 percent gain.

December delivery copper on the Comex division of the New York Mercantile Exchange lost 0.8 percent to $1.7110 a pound at the same time.

Rate Cuts

The Bank of Korea today joined the European Central Bank, the Bank of England and Switzerland's central bank in lowering interest rates as financial turmoil threatens a global recession, damping demand for commodities.

Technical charts that some traders use to forecast price movements indicated further weakness ahead in copper, according to analysts at Barclays Capital Inc.

The ``deteriorating backdrop'' of falling equities and renewed dollar strength ``opens the door'' for a resumption of the down trend, the bank's analysts led by Jordan Kotick, wrote in a report e-mailed today.

Copper may re-test the October 27 low of $3,590, with a potential for a move toward $2,390 a ton, wrote Kotick.

Among other LME-traded metals, aluminum was down 0.6 percent at $2,027 a ton, and nickel slipped 0.5 percent to $11,350. Zinc added 1.5 percent to $1,114 a ton, while lead and tin had not traded as of 10:34 a.m. in Singapore.

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