Copper Futures Fall in New York on Signs of Slowing U.S. Growth
By Millie Munshi
July 26 (Bloomberg) -- Copper fell for a fourth session in New York, the longest slump in more than a month, on concern that an economic slowdown in the U.S., the second-largest consumer of the metal, will curb demand.
U.S. sales of new homes dropped more than forecast in June and orders for durable goods excluding transportation equipment unexpectedly fell for a second month, the Commerce Department said today in separate reports. Copper, used in homes, appliances and cars, has declined 12 percent since reaching a record in May 2006 as demand waned in the U.S.
``The economic news hasn't been particularly good,'' said Warren Gelman, president of Kataman Metals in St. Louis. ``There are signs of a continued slowdown in U.S. demand.''
Copper futures for September delivery fell 3.3 cents, or 0.9 percent, to $3.5225 a pound on the Comex division of the New York Mercantile Exchange. Earlier, copper hit $3.51, the lowest since July 3. The metal is still up 23 percent this year as imports surged in China, the world's biggest copper user.
Purchases of new U.S. homes fell 6.6 percent in June, the biggest drop since January, to an 834,000 annual rate from a revised 893,000 rate the prior month, the Commerce Department said. Economists forecast sales would decline to 890,000, according to the median estimate in a Bloomberg survey.
The U.S. economy has been mired by the worst housing slump in 16 years that cut growth in the first quarter by 0.9 percentage points.
Housing Slump
``The U.S. housing sector continues to struggle,'' Merrill Lynch analysts led by Daniel Hynes wrote in a report on July 24. U.S. copper consumption won't grow for some time, according to the report.
Builders are the largest users of the metal, putting about 400 pounds (181 kilograms) in the average U.S. home. The U.S. housing sector accounts for about 5 percent of global copper demand, Merrill Lynch estimated. U.S. copper consumption fell 6 percent in 2006 because of a slowdown in home construction, according to the International Copper Study Group.
Excluding transportation equipment, demand for goods that are meant to last several years fell 0.5 percent after a revised 0.2 percent decrease in May. Economists expected a 0.6 percent increase, according to the median of 81 estimates in a Bloomberg survey.
Recent gains in U.S. inventories, a sign of falling demand, have also hurt the copper price, Sahil Kapoor, an analyst at Kotak Commodity Services Ltd. in Mumbai, wrote in a report today.
Stockpiles
Stockpiles of the metal in U.S. warehouses monitored by the Comex have more than tripled in the past year. Inventories have gained 9.9 percent this week to 22,728 short tons.
Supply threats in Chile, the world's largest source of the metal, may limit copper's losses today, traders said.
Chile's state-owned Codelco, the world's biggest copper producer, said contract workers disrupted production at its smallest mine and temporarily blockaded another mine during protests to press for higher wages.
On the London Metal Exchange, copper for delivery in three months fell $13, or 0.2 percent, to $7,765 a metric ton. The metal rose to a record $8,800 a ton on May 11, 2006.
A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
To contact the reporter on the story: Millie Munshi in New York at [email protected] .
Last Updated: July 26, 2007 14:31 EDT
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