Copper Declines After U.S. Home Sales Plunge, Pares Weekly Gain

By Li Xiaowei

Feb. 27 (Bloomberg) -- Copper dropped in Asian trading, paring weekly gains, amid concern that a worsening global recession will cut demand for the metal used in pipes and wires.

U.S. sales of new houses fell 10 percent in January to an annual pace of 309,000, the lowest since data began in 1963, the Commerce Department reported yesterday. U.S. is the world’s second-largest copper consumer after China.

The housing data “shows the U.S. economy is still on a downward track, and its pressure on metals market remains pervasive,” analysts led by Tan Wentao at HNA Topwin Futures Co. wrote in an e-mailed report today.

Copper for three-month delivery on the London Metal Exchange fell as much as 2.4 percent to $3,415 a metric ton before trading at $3,434 a ton at 1:33 p.m. in Shanghai. The metal has gained more than 8 percent this week, after dropping for the previous two weeks.

May-delivery copper on the Shanghai Futures Exchange was unchanged at 27,820 yuan ($4,067) after swinging between gains and losses.

Still, copper inventories monitored by the London Metal Exchange fell by the most in four months yesterday and volumes scheduled to be taken out of warehouses, known as canceled warrants, jumped to the highest in a year.

“The inventory changes could constrain the magnitude of copper’s slide,” Chen Yonglin, an analyst at Citic Calyon Futures Co., said by phone from Shanghai.

London aluminum fell as much as 1.1 percent to $1,349 a ton before trading at $1,355 at 1:32 p.m. in Shanghai. The metal, used in buildings and car parts, has added almost 4 percent this week after falling for the previous two weeks.

Japanese Automakers

Output by Japan’s 12 automakers fell 41 percent to 576,539 vehicles in January from a year earlier as a recession damped domestic and export demand, the Japan Automobile Manufacturers Association said today.

Japan’s shipments of aluminum rolled products tumbled 31 percent in January, the biggest drop since November 1980, as demand deteriorated because of accelerated production cuts by carmakers and electronics equipment producers.

Among other LME-traded metals, zinc slid 0.5 percent to $1,132, lead fell 2.1 percent to $1,022, nickel lost 1.3 percent to $9,925 and tin declined 0.9 percent to $10,850.

To contact the reporter for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net