Bloomberg News

Copper, Industrial Metals Slump as Europe’s Crisis Hurts Demand

September 29, 2011

Sept. 29 (Bloomberg) -- Industrial metals fell for a second day, with three-month copper plunging as much as 5.9 percent, on concern that Europe’s sovereign-debt crisis and the prospects for slower growth in China will hurt demand.

Copper dropped as much as $430 to $6,821 per metric ton on the London Metal Exchange, and traded at $7,060 at 12:08 p.m. in Shanghai. The LME Index of six metals has slumped 20 percent this quarter to yesterday, set for the biggest loss since 2008.

The European Commission is resisting ideas by some government officials to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed on at July summit, a European official said. Lawmakers in Germany are set to vote today to expand the region’s rescue fund.

“Investors’ confidence is waning,” Ren Yunpeng, an analyst at China International Futures Co., said by phone from Shenzhen. “Now the debt crisis is leading to a global liquidity problem as tumbling global markets drain funds.”

Fifty-nine percent of respondents in a quarterly Bloomberg Global Poll said that China’s economy, which expanded 9.5 percent last quarter, will gain less than 5 percent a year by 2016. Twelve percent see such a slowdown within a year, and 47 percent said it will occur in two to five years, according to investors, analysts and traders who are Bloomberg subscribers.

December-delivery copper fell as much as 5.1 percent to $3.08 per pound on the Comex in New York before paring losses to $3.1945. The December-delivery contract lost 5.6 percent to 52,090 yuan ($8,143) per ton on the Shanghai Futures Exchange.

While Citigroup Inc. said yesterday that copper may decline to as low as $4,500 per ton under a so-called doomsday scenario, Goldman Sachs Group Inc. remained bullish. “We estimate tight to deficit-market conditions to 2015,” Goldman analysts including Fawzi Hanano said in a report yesterday.

Aluminum dropped 1.2 percent to $2,208 per ton, zinc declined 3.1 percent to $1,881 a ton, and lead fell 1.9 percent to $1,970 per ton. Nickel lost 1.5 percent to $18,235 per ton, and tin retreated 1 percent to $20,350 a ton.

--Helen Sun. Editor: Jake Lloyd-Smith

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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