Copper prices tumble

LONDON – Copper prices buckled yesterday as a massive jump in inventories intensified fears about falling demand particularly from China, the world’s largest consumer of the industrial metal.

Copper fell more than four per cent to US$3 182,25 a ton after data showed London Metal Exchange stocks rose by 22 750 tonnes, the biggest one-day rise since August 2004, to 477 675 tonnes, the highest since November 2003. The metal used in power and construction and a key gauge of economic activity was trading at US$3 198 a ton in the morning on the LME compared with US$3 330 at the close on Wednesday. The increase in copper stocks is one of the biggest we’ve seen for a long time,’ said David Wilson, analyst at Societe Generale, adding that a speech at the World Economic Forum by China’s Premier Wen Jiabao had also hit sentiment. Wen said China’s economy had been hit hard by the global financial crisis, which was partly caused by the unsustainable economic models of certain countries. Many people were secretly hoping that China would pull the rest of the world out of this current situation. China is saying that’s not possible,’ Wilson said. Copper has plunged by more than 60 per cent since a record high of US$8 940 a ton last July. Prices started to fall in the second half of last year as the market priced in a realisation that China may not be able to offset falling demand from the United States, the world’s largest economy. – Nampa-Reuters