2 weeks later Copper Falls on Concern That U.S. Slowdown Will Hurt Demand
London, Dec. 20 (Bloomberg) -- Copper fell to a two-week low
on investors' worries that an economic slowdown in the U.S. will
hurt demand for the metal from industrial consumers and house
builders at a time when inventories of the metal grow.
The Federal Reserve yesterday announced for the first time in
two years that further ``weakness'' is a bigger threat than
inflation for the U.S. economy. Analysts say cooling of the
economy, which accounts for 23 percent of global copper usage,
will likely slow growth in Europe, which consumes over 26 percent
of the metal.
``Funds are selling copper on the back of the Fed's
announcement and the big fall on the stock market'' that followed,
said Robin Bhar, a metals analyst at Standard Bank. ``The slowdown
is obvious. Rising inventories help to cap the market.''
Copper for three-month delivery fell as much as $22, or 1.2
percent, to $1,858 a metric ton on the London Metal Exchange. The
metal has fallen 8 percent from its three-year high, reached in
September.
After falling about 370,000 tons short of consumption this
year, copper supply may almost meet demand in 2001, creating
``effectively a balanced market,'' said Ted Arnold, an analyst at
Prudential Bache.
The price of the metal fell, even though workers at Western
Europe's biggest copper mine, Neves Corvo in Portugal, decided to
continue their week-old strike over wages and labor conditions.
Traders shrugged off the development, saying that Somincor-
Sociedade Mineira de Neves Corvo apparently has enough stockpiles
to ensure supplies for one month.
Copper inventories, monitored by the LME, increased 1 percent
to 341,500 tons today, rising for the third straight day after
they reached their lowest level since Sept. 1998 last Friday.
While some analysts say rising stockpiles may be a sign of
falling demand, others see it mostly as an end-of-year effect.
``Many companies try to get rid of inventories now for tax
accounting purposes,'' Bhar said.
--Vladimir Todres in the London newsroom (44 20) 7673 247, or
vtodres@bloomberg.net/jah
Story illustration: {LMCADS03 <Cmdty> GPO <GO>} to graph copper
prices on the LME. |
