Metals take a tumble

09:35, May 18, 2010      

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Copper, aluminum, zinc, lead and nickel tumbled on concern that demand for raw materials will slow as European nations slash budgets to curb deficits and as Asian stocks extend a global slump.

Three-month copper fell as much as 3.5 percent to $6,685 a ton on the London Metal Exchange, the lowest price since May 5, and traded at $6,710 by 2:41 pm Beijing time.

Aluminum dropped 4.1 percent to $2,015 a ton, the lowest since Feb 9, and zinc fell 4.9 percent to $1,955 a ton, the lowest since Feb 5. Metals also plunged on the Shanghai Futures Exchange.

Asian shares fell 3.1 percent, the euro dropped to its lowest against the dollar since 2006 and the cost of insuring bonds from default jumped, deepening concern the crisis may derail the global recovery.

The Reuters/Jefferies CRB Index of 19 commodities tumbled the most in nine weeks on May 14.

"Metals prices may continue to push lower if the European situation deteriorates," said Jia Zheng, an analyst at Southwest Futures Co.

One week after agreeing to a $1 trillion financial lifeline for the euro region, European finance ministers meeting in Brussels on Monday are under pressure to show they can reduce deficits fast enough to satisfy investors and then police budgets once targets are met.

Greek Prime Minister George Papandreou said Greece is considering legal action against US banks that may have contributed to the country's debt crisis.

The Dollar Index added 1.1 percent against six major counterparts to 87.063, the highest level since March 18, 2009. The index has climbed for four straight weeks as investors seek a refuge on euro zone concern.

'Bottom out'

"Copper may bottom out at $6,000 within this month," Li Jingyuan, a trading manager at Haitong Futures Co, said from Shanghai.

Copper for August delivery in Shanghai slumped to the daily 5 percent limit from the previous settlement price to 53,590 yuan ($7,848) a ton, the lowest level since Feb 9.

Aluminum fell 4.8 percent to 15,060 yuan, the lowest level since Oct 29, 2009, and zinc slumped to the 5 percent limit to 16,125 yuan, the lowest price since Oct 21, 2009.

China's stocks fell, driving the benchmark index to almost a one-year low, partly on concern the government may step up measures to cool property speculation.

Premier Wen Jiabao said the government will "decisively" contain excessive increases in housing prices in some cities and curb the growth of industries with overcapacity, the Xinhua News Agency said on May 15.

Lead tumbled 4.9 percent in London to $1,845 per ton, the lowest price since Aug 21, 2009.

Nickel fell 5.1 percent to $20,460 a ton and tin decreased 1.8 percent to $17,235 a ton.

Source: China Daily


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