By Glenys Sim
Dec. 2 (Bloomberg) -- Copper fell for the fourth day to a one-week low on signs consumption is weakening as global manufacturing shrinks. Lead slumped to the lowest in 28 months.
Prices dropped after the purchasing managers’ indexes in Europe, Russia, China and South Africa showed record declines and U.S. manufacturing contracted at the fastest pace in 26 years. India’s exports in October fell for the first time in seven years.
“It’s one piece of bad economic data after another and with industrial metals demand so closely tied to economic growth, there’s little to cheer about,” Li Junchao, analyst at Shenyin Wanguo Futures Co., said today from Shanghai.
London Metal Exchange copper fell 1.7 percent to $3,530 a metric ton at 3:16 p.m. Singapore time, and March-delivery copper on the Comex division of the New York Mercantile Exchange dropped 2.2 percent to $1.5960 a pound.
Copper for February delivery on the Shanghai Futures Exchange dropped as much as 3.6 percent to 27,030 yuan ($3,925) a ton, and ended the day at 27,080 yuan.
“The latest set of purchasing manager indices does not point towards a swift turnaround in manufacturing activity,” Michael Widmer, senior metals market analyst at BNP Paribas, wrote in a report e-mailed today. “The statistics suggest that prices are unlikely to be supported by demand in the coming weeks.”
Lead fell for a sixth day, by as much as 3.6 percent, to $1,061 a ton, the lowest since July 26, 2006. It traded at $1,080 by 3:17 p.m. Singapore time.
Lead Supply
Apart from the “general malaise” within the base metal sector, expectations for increased lead supply appears to have been the trigger for the drop, according to Societe Generale SA.
“The Chinese government may remove the 10 percent export tax on refined lead that was imposed in July 2007, a move that has seen China emerge as a net importer of lead in recent months,” the bank’s analysts led by Frederic Lasserre wrote in a report.
“Given that domestic demand is now beginning to ease, the government might be more amenable to industry’s request for the removal of the tax,” wrote Lasserre.
Still, the metal used mainly in car batteries, appears to be in a “better state” than the rest of the LME complex, as it is the only metal, apart from tin, where stocks are lower than at the start of the year, said Lasserre. Stockpiles of lead in London Metal Exchange warehouses, which were 45,350 tons on Jan. 2, stood at 41,600 tons yesterday.
Among other LME-traded metals, aluminum fell 0.5 percent to $1,726 a ton, zinc slipped 0.8 percent to $1,157 and nickel lost 0.3 percent to $9,775 as of 3:10 p.m. in Singapore. Tin was little changed at $12,400 a ton.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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