Copper, Aluminum Extend Falls After Japan’s Record Orders Drop

By Claudia Carpenter

Jan. 15 (Bloomberg) -- Copper dropped for a second day and aluminum extended its decline to four sessions after a record drop in machinery orders in Japan added to signs that demand is worsening for industrial metals.

Japan’s machinery orders fell 16 percent in November, twice the estimate of economists in a Bloomberg survey, figures from the Cabinet Office in Tokyo showed. Japan was the fourth-largest copper buyer last year, according to the International Copper Study Group. The MSCI World Index of equities fell for a seventh day, led by the materials group that includes BHP Billiton Ltd.

“Certainly for copper, prices can fall further,” said Neil Buxton, managing director of GFMS Metals Consulting Ltd. in London. “Given the data out there, there’s little reason for any optimism at all.”

Copper for delivery in three months on the London Metal Exchange dropped $71, or 2.2 percent, to $3,215 a metric ton as of 9:55 a.m. local time, eroding this year’s gain to 4.7 percent. Aluminum declined $31, or 2.1 percent, to $1,464 a ton, extending this year’s drop to 4.9 percent.

BHP slid 6.6 percent in Sydney trading.

Copper fell 54 percent last year, the most since at least 1987, and aluminum declined 36 percent as recessions in the U.S, Germany and Japan curbed demand for metals used in cars, homes and machinery.

Manufacturing in the Philadelphia area is projected to show a reading of minus 35 in January, according to a separate Bloomberg survey. Figures less than zero signal manufacturing is contracting. The Federal Reserve Bank of Philadelphia report is due at 3 p.m. London time.

Imports, Stockpiles

Demand for copper and aluminum in China, the world’s largest buyer, is also falling and pressuring prices. Imports dropped 1.3 percent last year for copper and alloys and 10 percent for aluminum products, the Beijing-based customs office said.

Stockpiles of copper in warehouses monitored by London Metal Exchange increased 5,175 tons, or 1.4 percent, to 387,325 tons, bringing this year’s increase to 14 percent. Copper futures for March delivery fell 4.5 cents, or 3 percent, to $1.4425 a pound ($3,180 a ton) on the Comex division of the New York Mercantile Exchange.

Aluminum stockpiles in Japan climbed 17 percent in December to 316,300 tons, the highest since January 2006, trading company Marubeni Corp. said.

Nickel fell $100, or 0.9 percent, to $10,750 a ton, lead dropped $15, or 1.3 percent, to $1,116 a ton and tin declined $50, or 0.5 percent, to $11,150 a ton. Zinc increased $20, or 1.6 percent, to $1,283 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net