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Last Updated: Wednesday, 13 October, 2004, 21:37 GMT 22:37 UK
Copper plunges from 15-year highs
Copper mine
Plenty of copper, but demand may be slowing down
Fears of falling demand for copper in key US and Chinese markets have prompted a plunge in metals prices on both sides of the Atlantic.

Copper futures sank by as much as 12% from 15-year highs on the New York Metals Exchange, before settling 11% lower at $1.2888 a pound.

In the UK, copper fell 8.4% from a 15-year high of $3,145 on 8 October.

Traders described the speculative selling on the London Metal Exchange as unstoppable.

"It was crazy - after the rings it was marked down on the screens and that brought out yet more sell signals," said one floor trader.

However, many had expected copper prices to ease as they had been at a 15-year high earlier in the week.

Shares tumble

In the US, the slide prompted a swathe of downgrades from the mining sector - driving aluminium giant Alcoa 3% lower to $32.19 and rival Alcan 3.2% down to $46.85.

BHP Billiton added to the worries with a warning that copper supplies are set to outstrip demand in the second half of 2005 as more production comes online.

London's major listed mining stocks, led by Chilean copper miner Antofagasta, Xstrata, Corus, Anglo American and BHP Billiton, took a hammering on Wednesday as metal prices plunged.

It is hard to say whether we've seen the peak for the cycle - we need to get this reaction out of the way first
LME metals trader

"The shares could come off a bit more. Once they start falling sometimes they just keep going," said one analyst at a major investment bank in London.

London-traded nickel prices tumbled 15%, aluminium fell 7.1% while three-month zinc lost almost 7% on the day as inventories showed a surplus of metals in LME warehouses.

Dinner week

Views were mixed as to whether the falls were likely to signal a major shift for the booming metals market.

"It is hard to say whether we've seen the peak for the cycle - we need to get this reaction out of the way first," said another metals trader.

Another reason for the wild price moves may have been the thin conditions during the industry's biggest annual event, the LME dinner week in London.

Many market players were sidetracked by meetings or travelling instead of trading.

"That illiquidity tends to exaggerate the move when it happens - we saw it on the way up as well," another trader explained.




SEE ALSO:
Chinese whispers drive metals boom
16 Nov 03  |  Business
Price-fixing raids on mining giants
15 May 03  |  Business
Metal prices spark recovery hopes
23 Nov 01  |  Business
Web threat to 123-year-old exchange
23 Oct 00  |  Business


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