Copper Falls After U.S., Asian Stocks Tumble on Recession

By Li Xiaowei

Feb. 24 (Bloomberg) -- Copper declined in London after U.S. stocks slumped to a 12-year low and Asian stocks fell to the lowest in more than five years on concern that a deepening recession will erode earnings.

The MSCI Asia Pacific Index is set for its lowest close since Aug. 28, 2003 after the Standard & Poor’s 500 Index fell to its lowest close yesterday since April 1997. Copper demand is still “very weak” as global economic growth declines, said Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly-traded producer of the metal.

“The plunge in U.S. stocks fueled concerns about a deepening recession and took metals markets down as well,” Wang Lei, an analyst at Haitong Futures Co., said in an e-mailed report today.

Copper for three-month delivery on the London Metal Exchange fell as much as 2.3 percent to $3,157 a metric ton before trading at $3,185 a ton at 3:02 p.m. in Shanghai.

May-delivery copper on the Shanghai Futures Exchange lost 2.7 percent to 26,550 yuan ($3,882).

Japan’s copper wire and cable shipments plunged 21.2 percent in January from a year earlier, the biggest monthly drop in more than three decades, as the construction sector was hit by recession.

China Zinc

China’s State Reserve Bureau will seek to buy zinc tomorrow from the largest domestic producers, said three company executives who declined to be identified. The bureau bought 59,000 tons of the metal in January and made two purchases of aluminum to support the metals industry.

“Unless the second zinc purchase doubles the first, we won’t see much support for Chinese zinc prices because of a big surplus,” Yu Ye, an analyst at Minmetals Starfutures Co., said by phone from Shenzhen today. The surplus has swelled as some production was brought back on-line after cuts and imports climbed, she said.

London zinc was 0.2 percent up at $1,100 and Shanghai zinc closed down 1.2 percent at 10,105 yuan.

Among other LME-traded metals, aluminum was up 0.5 percent at $1,295 a ton, lead fell 1.3 percent to $1,010 a ton, nickel slid 0.6 percent to $9,450 a ton, and tin was little changed at $10,400 a ton.

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