Copper Falls for Second Day Before Release of U.S. New-Home Sales Report
Copper fell for a second day in New York and London before the release of figures that may signal a stagnant housing market in the U.S., the world’s second-biggest consumer of the metal after China.
Sales of new homes were unchanged last month at the second- lowest rate on record in the U.S., according to economists surveyed by Bloomberg News. Copper slid yesterday to the lowest close in almost a month after sales of existing homes in the country fell more than estimated. Figures due on Aug. 27 may show the U.S. economy expanded less than previously reported.
“Sentiment is fairly bearish on the U.S. economy going forward” until about the start of the fourth quarter, Nicholas Snowdon, an analyst at Barclays Capital in New York, said today by phone.
Futures for December delivery slid 4 cents, or 1.2 percent, to $3.222 a pound at 8:06 a.m. on the Comex in New York. Copper for delivery in three months fell 0.9 percent to $7,075 a metric ton on the London Metal Exchange.
The Commerce Department’s new-homes report, scheduled for 10 a.m. New York time, may show that sales held at a 330,000 annual pace in July. Building and construction account for almost half of U.S. copper demand, according to an estimate by Bank of America Merrill Lynch. Figures due 90 minutes earlier may show that orders for durable goods increased 3 percent in July.
‘Overdone’ Concern
“Prices today will be depending on the data we’re getting from the U.S.,” David Wilson, a metals analyst at Societe Generale SA in London, said by phone. “We’re focusing on the U.S., and there’s a concern the economy there might slow down.”
A halt in expansion in the U.S. would affect Europe and any countries relying on exports, according to Wilson. Still, “our view is the nervousness is overdone and the key driver in industrial metals remain China,” he said.
Concern about the strength of the U.S. and Chinese economies has contributed to LME copper’s 4.1 drop this year, along with gains by the dollar.
“There is strong physical demand for some commodities, such as copper, where consumers are restocking and premiums continue to rise,” BHP Billiton Ltd., the world’s largest mining company, said today. Profit doubled from a year earlier to $6.587 billion in the fiscal second half through June, BHP said.
Inventories Shrink
LME copper stockpiles dropped 0.4 percent to 402,425 tons, taking this year’s decline to 20 percent. Canceled warrants, or orders to draw metal from LME warehouses, fell for a fourth day by 4.6 percent to 28,850 tons.
Including metal tracked by exchanges in Shanghai and New York, copper inventories totaled 600,027 tons, or 12 days of global consumption based on Royal Bank of Scotland Group Plc’s estimate for demand this year of 18.2 million tons. That’s down from almost 14 days at the start of 2010.
Aluminum for three-month delivery on the LME dropped 0.6 percent to $2,015 a ton. Aluminum Corp. of China Ltd., the nation’s biggest producer of the lightweight metal, plans to shut 330,000 tons of outdated capacity by 2011, Chairman Xiong Weiping said today in a Bloomberg Television interview.
That would be about a third of the 1 million tons of capacity the Chinese government wants closed nationwide as part of a plan to curb metal pollution and energy usage.
Tin declined 1.2 percent to $20,150 a ton. Immediate- delivery metal traded at a premium of $15 a ton to the three- month contract, compared with $20 yesterday and $200, the highest in almost 10 months, on Aug. 13. The so-called backwardation’s drop signaled more availability of metal for nearby deliveries.
Zinc lost 0.9 percent to $1,973 a ton and lead fell 2.1 percent to $1,970 a ton. Nickel slid 2.3 percent to $20,130 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net.
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