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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (339)	8/1/2001 2:52:16 PM
From: Stephen O	Respond to of 2131

Copper Falls as Economic Slowdown Curbs Demand in U.S., Europe New York, Aug. 1 (Bloomberg) -- Copper fell to its lowest price in more than two years, as reports of slowing economies in the U.S. and Europe reflected weakening demand from manufacturers and builders. Declines in factory orders in the U.S. and lower sales by manufacturers and retailers in Europe showed no easing of the slowdown that's reduced purchases of copper wire and pipes. The 20 percent drop in copper prices this year led Phelps Dodge Corp., the No. 2 producer, to predict a loss during the current quarter. ``The message continues to be `no growth,''' said David Andres, purchasing director for metals at General Motors Corp., the largest automaker. ``The economy just keeps dragging along.'' Copper for September delivery fell as much as 1.15 cents, or 1.7 percent, to 67.1 cents a pound on the Comex division of the New York Mercantile Exchange, the lowest price for a most-active contract since June 24, 1999. Prices may fall as low as 65 cents in coming weeks, said George Cheveley, research manager at CRU International, a copper research firm in London. The National Association of Purchasing Management's factory index dropped to 43.6 last month from 44.7 in June. A reading below 50 signals contraction, and the index has stayed in the 40s for a year. In Europe, manufacturing fell for a fourth straight month, according to a purchasing managers survey covering the dozen countries sharing the euro. Copper prices have fallen in step with the economic slowdown, plunging from a three-year high of 94.4 cents a pound in September. The reduced demand sent copper inventories monitored by the London Metal Exchange to a 14-month high on Thursday. Phelps Dodge Phelps Dodge yesterday said it expected to lose between $1.10 and $1.20 a share in the third quarter, before any one-time gains or losses. It would be the third consecutive quarterly loss for the Phoenix-based company, the second-largest copper producer after Chile's Codelco. In a further harbinger of weakening demand, the Commerce Department reported that U.S. construction spending declined 0.7 percent in June, the biggest drop since July 2000. Builders account for 40 percent of copper demand. A typical single-family home contains about 400 pounds of the metal, according to the Copper Development Association, a New York-based industry group. General Motors lowered North American production by 13 percent during the second quarter from a year earlier to 1.36 million vehicles to trim inventories on dealer lots. ``Our business is definitely off year-over-year, and we're not forecasting a dramatic bounce,'' Andres said. An automobile contains about 50 pounds of copper, according to industry estimates. Copper inventories in LME-monitored warehouses reached 654,325 metric tons on Thursday, the highest level since May 12, 2000, the exchange said. Supplies have risen 82 percent this year. In London, copper for delivery in three months fell as much as $24.50, or 1.6 percent, to $1,477 a metric ton (67 cents a pound) on the London Metal Exchange.