Copper Falls on Signs of Further Slowdown in Factory Demand
2001-04-06 12:11 (New York)
Copper Falls on Signs of Further Slowdown in Factory Demand
New York, April 6 (Bloomberg) -- Copper fell to its lowest
price in a year after the government reported a larger-than-
expected drop in U.S. manufacturing jobs, signaling that pipe and
wire makers will be using less of the metal.
Factory employment fell 81,000 in March, declining for an
eighth-straight month, the Labor Department said. Weakening demand
for copper for use in products ranging from auto parts to
electronics has contributed to a 20 percent drop in prices in the
past seven months.
``Business is slow,'' said Herbert Rhodes, senior manager of
commercial metals in Omaha, Nebraska, for Avaya Inc., which makes
wire and connectors for telephones. ``The way the leading
indicators are drifting, it would appear we are heading toward a
contraction in the economy, if not recession. That would be bad
for all of the base metals.''
Copper for May delivery fell as much as 1.6 cents, or 2.1
percent, to 75.25 cents a pound on the Comex division of the New
York Mercantile Exchange, the lowest price for a most-active
contract since April 18, 2000.
In London, copper for delivery in three months fell as much
as $35, or 2.1 percent, to $1,660 a metric ton (75.30 cents a
pound) on the London Metal Exchange, also the lowest price in a
year.
The drop in factory employment last month was almost twice as
large as the 43,000 expected by analysts surveyed before the
report.
U.S. businesses last month announced plans to eliminate a
record 162,867 jobs as the economy cooled, a survey yesterday by
Chicago-based job-placement firm Challenger, Gray & Christmas
showed.
`Screeching Halt'
Leading the list was Troy, Michigan-based Delphi Automotive
Systems Corp., the largest auto-parts maker, which said it would
cut 11,500 jobs over a year because of slowing demand for
automobiles. The average car contains 50 pounds of copper,
according to the Copper Development Association, a New York-based
industry group.
``Business came to a screeching halt about a month ago,''
said Vincent Rego, chief executive of McKinney, Texas-based Encore
Wire Corp., which supplies wire to builders and manufacturers.
Demand for copper from builders, whose business has been
buoyed by low borrowing costs for home buyers, has helped keep
prices from falling further. Construction jobs rose 12,000 in
March after rising 7,000 in February and 157,000 in January, the
Labor Department report showed.
``Housing is probably not as bad as other sectors in the
copper market,'' said Scott Moyer, a materials buyer at Cambridge-
Lee Industries Inc. in Reading, Pennsylvania, which uses about
5,000 tons of scrap copper a month to make pipes.
The weakening industrial demand has contributed to a 28
percent increase in warehouse copper inventories monitored by the
London Metal Exchange from a 2 1/2-year low in early March.
Supplies gained for a 16th straight trading day, rising 0.8
percent to 412,125 metric tons, the highest level since Oct. 22,
the exchange said in its daily report.
--Claudia Carpenter in the New York newsroom (212) 318-2346 or at
ccarpenter2@bloomberg.net with reporting by Carlos Torres in
Washington and Rosland Briggs Gammon in the Princeton newsroom/jb |
