BLBG: Copper Falls to 18-Month Low as Slowing Growth Reduces Demand
By Halia Pavliva
Oct. 2 (Bloomberg) -- Copper fell to the lowest in 18 months on concern that slowing economic growth worldwide is reducing demand for the metal used in wires and pipes.
Inventories of copper in warehouses monitored by the London Metal Exchange jumped 62 percent in the third quarter, reaching an 18-month high on Sept. 19. LME stockpiles were little changed today, at 199,075 metric tons. The U.S. economy, the world's largest, expanded at a 2.8 percent annual rate in the second quarter, less than first estimated by the Commerce Department.
``The market is responding to metal held in inventory, to the slowing global economy and credit concerns,'' said John Gross, publisher of The Copper Journal and a metals-management director at Scott Brass Inc. in Cranston, Rhode Island. ``The market is gripped by fear. Money is exiting.''
Copper futures for December delivery tumbled 10.95 cents, or 3.9 percent, to $2.68 a pound at 10:37 a.m. on the Comex division of the New York Mercantile Exchange. Futures earlier touched $2.676, the lowest for a most-active contract since March 6, 2007. Copper plunged 15 percent last month, capping a 26 percent drop in the third quarter.
On the London Metal Exchange, copper for delivery in three months fell $200, or 3.2 percent, to $5,960 a metric ton ($2.70 a pound). Prices on the LME last month fell 15 percent, the most since June 1996.
The U.S. Senate passed a $700 billion rescue package for financial companies last night in a bid to unclog frozen credit markets. Senators added $149 billion in tax benefits to the plan, among inducements aimed at making it more appealing to lawmakers in the House of Representatives, who rejected a similar proposal earlier this week.
``For the balance of the week, all eyes will once again be on Washington, as Congress debates a `new and improved' version of the Treasury proposal,'' Edward Meir, an analyst at MF Global Ltd. in Stamford, Connecticut, said today in a note to clients.
``House passage is almost certain this time,'' Meir said. ``Metals will track a likely rally in the U.S. stock market if and when these proposals get passed. We would therefore recommend closing out short positions here, and would wait for a rally to resell at higher levels.''
The rescue proposal, approved on a 74-25 vote, authorizes the government to buy troubled assets from financial institutions rocked by record home foreclosures. Added inducements for House lawmakers would raise the ceiling on federally insured bank deposits and permit regulators to suspend mark-to-market asset-valuation rules blamed for fueling the credit crunch.
To contact the reporter on this story: Halia Pavliva in New York at email@example.com.