Copper Drops for Second Day as Flu May Slow Economic Recovery

By Glenys Sim

April 28 (Bloomberg) -- Copper fell for a second day in Asia on concern that the swine flu outbreak may hamper efforts to revive the global economy and hurt demand for industrial metals.

The World Health Organization raised its global pandemic alert to the highest since it adopted a warning system in 2005, saying the swine flu is not containable. More than 140 people have died in Mexico, where the first cases of the disease were discovered. Commodities from oil to corn tumbled amid speculation economic activity may be curtailed.

“Nothing is spared from the anxiety that’s coming from the outbreak of the disease,” Shi Hai, an analyst at Shanghai Tonglian Futures Co., said today. “It’s still too soon to tell but investors are worried the swine flu may end up crippling the economy as activity such as travel slows.”

Copper for three-month delivery on the London Metal Exchange lost as much as 0.8 percent to $4,310 a metric ton and traded down 0.1 percent at $4,340 at 11:16 a.m. Singapore time. The metal has fallen 50 percent in the past year as the global recession curbed consumption.

August-delivery copper on the Shanghai Futures Exchange gained as much as 2.1 percent to 35,220 yuan ($5,158) a ton, before trading at 34,960 yuan, up 1.3 percent.

While it’s “too early to call” the severity of swine flu and its economic implications, the outbreak of Severe Acute Respiratory Disease, or SARS, in 2003 provides a useful recent guide to the potential parameters relating to a global outbreak, Standard Chartered Bank said in a report.

“The International Monetary Fund estimated that East and Southeast Asia lost almost $18 billion in demand and business revenue due to SARS,” the bank’s analysts led by chief economist Gerard Lyons wrote yesterday.

Among other LME metals, aluminum fell 0.2 percent to $1,443 a ton, zinc slid 0.6 percent to $1,380 a ton and lead lost 0.7 percent to $1,350 a ton. Nickel dropped 0.7 percent to $11,300 a ton and tin hadn’t traded as of 11:07 a.m. in Singapore.

-- Editors: Matthew Oakley, Wendy Pugh

To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net