BLBG : Copper Extends First Weekly Drop in Six Weeks on Data, Clunkers
Aug. 21 (Bloomberg) -- Copper fell in Asia, extending its first weekly decline in six, on speculation the recovery from the world’s worst postwar recession may be protracted.
The metal, used mainly in construction, automobiles and power grids, is down 3.7 percent this week, the most since the week ended June 19, after the U.S. government said it will close the “cash for clunkers” vehicle trade-in program. Unemployment and mortgage delinquencies in the U.S., the second-largest user of the metal, are also rising, reports yesterday showed.
“Economic data in the past month has been mixed, and combined with lower liquidity in the summer months, we’ve seen a lot of volatility in the market,” Liu Biyuan, analyst at GF Futures Co., said from Guangzhou today.
Copper for three-month delivery on the London Metal Exchange fell as much as 0.6 percent to $6,015 a ton as of 8:33 a.m. in Singapore. There were no price updates during Asian trading due to “connection problems with the system.”
“The matter is now under thorough testing,” the exchange said in a statement on its Web site.
December-delivery copper on the Shanghai Futures Exchange slid as much as 2 percent to 46,660 yuan ($6,830) a ton and stood at 47,050 at the 11:30 a.m. midday break.
Copper for September delivery on the Comex division of the New York Mercantile Exchange dropped a sixth day, by 0.7 percent to $2.7350 a pound. This is the longest slide since the seven-day period ended May 15.
“$6,000 is a key psychological support,” Liu said. “While not that much copper goes into cars, the ending of the cash for clunkers program may damp investor sentiment enough to break this level.”
The U.S. clunkers plan, which offers buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, will close on Aug. 24, Transportation Secretary Ray LaHood said yesterday. It has recorded more than 457,000 transactions worth $1.9 billion in rebates.
About 50 pounds of copper is used in an average car, according to the Copper Development Association. The U.S. is the second-largest copper consumer behind China.
