By Glenys Sim
April 27 (Bloomberg) -- Copper tumbled in Asia on concern that the global recession won’t ease anytime soon after a White House official said the economy in the world’s second-biggest user will continue to contract.
“I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Lawrence Summers, director of the White House National Economic Council, said yesterday.
“Investors are doing a bit of a reality check now,” Tao Jinfeng, an analyst at Jiangsu Donghua Futures Co., said today from Tianjin. “A quick, sharp recovery is looking highly unlikely and this doesn’t bode well for metals demand.”
Copper for three-month delivery on the London Metal Exchange dropped as much as 3.4 percent to $4,320 a metric ton and traded at $4,338 at 10:38 a.m. Singapore time. The metal used in electrical wiring and plumbing had its worst week in two months last week.
August-delivery copper on the Shanghai Futures Exchange gained as much as 2.4 percent to 35,820 yuan ($5,248) a ton, before trading at 34,510 yuan, down 1.3 percent.
Fifteen of 20 of analysts, investors and traders surveyed by Bloomberg said copper would continue its losing streak this week on speculation the price is no longer reflects the outlook for demand after a 41 percent rally this year. Four said copper would rise and one forecast little change.
China Purchasing
“Speculation that China’s state reserve has stopped buying, and may even sell recent purchases in the domestic market, is also weighing on sentiment,” Wang Zhouyi, an analyst at China International Futures (Shanghai) Co., said today.
There has been speculation that the State Reserve Bureau was selling copper via China Minmetals Group and Wanxiang Resources Co. to take advantage of a recent gain in prices, Pang Ying, an analyst at Shenzhen Rongtuo Trading Co., said April 21. “The talk is that they will buy it back when prices decline,” Pang said.
China’s State Reserve Bureau has bought 300,000 tons of copper and may buy a further 600,000 to 900,000 tons during the rest of this year, according to Macquarie Group Ltd. The country imported a record 296,843 tons of the metal in March as buyers took advantage of lower overseas prices to replenish stockpiles.
Among other LME metals, aluminum fell 0.7 percent to $1,448 a ton, zinc slid 2.5 percent to $1,380 a ton, nickel dropped 3.9 percent to $11,100 a ton, and tin lost 1.2 percent to $12,452 a ton. Lead lost 2.1 percent to $1,405 a ton.
-- Editors: Matthew Oakley, Andrew Hobbs
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net
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