Copper Plunge Weighs on Metal Producers; Manufacturers GainKana Nishizawa
Copper’s tumble to its lowest in more than five years dragged down shares of metal producers, while prospects for lower input costs boosted the outlook for manufacturers and utilities.
Jiangxi Copper Co., China’s largest producer of the industrial commodity, dropped 5.9 percent in Hong Kong while BHP Billiton Ltd., the world’s biggest miner, slid to an almost six-year low in Sydney. Kingboard Chemical Holdings Ltd., a maker of copper foil, advanced 2.3 percent. Mainland electricity generator Huadian Power International Corp. surged 6.5 percent in Hong Kong.
“The global economy seems to be going down so the demand isn’t there,” said Francis Lun, chief executive officer of Geo Securities Ltd. “China’s mining sector had an unprecedented boom -- everybody increased production and now you have enormous overhang of overcapacity. If copper prices fall, manufacturers benefit.”
Copper dropped as much as 8.7 percent in London to below $5,400 a metric ton on speculation demand for raw materials won’t be enough to eliminate a supply glut. The World Bank cut its global growth forecast for this year to 3 percent from a projection of 3.4 percent in June. The Bloomberg Commodity Index slid to its lowest since November 2002 yesterday.
A measure of material companies fell 1.3 percent to lead declines on the MSCI Asia Pacific Index, which slid 0.3 percent as of 4:20 p.m. today in Hong Kong. Telecommunication companies, for which copper is the most commonly used element for systems, were the biggest gainers among the regional index’s industry groups. NTT Docomo Inc. advanced 2.7 percent in Tokyo while PCCW Ltd. added 2.5 percent in Hong Kong.