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Copper futures fall over loss reports

By Wang Lan (China Daily)
Updated: 2007-02-06 09:16

SHANGHAI: Reports of multi-million dollar losses by an international metals trader pushed down global copper prices to their lowest level in months.

Related readings:  Copper futures continues slump  Less copper consumed this year  Copper enterprises cut production

Worries about the possible unwinding of the position held by Red Kite Management, a $1 billion metal-trading hedge fund, triggered a slump in London prices last Friday, and a ripple effect was felt in Shanghai yesterday.

Prices of a number of base-metals futures contracts on the London Metal Exchange (LME) took a dive last Friday.

Red Kite said that in January it lost 15 percent on the fund it manages, which market watchers say could force the company to unwind its long positions. Such worries have pushed down international prices of base metals by unusually wide margins.

Copper for delivery in three months slumped $255, or 4.6 percent, to $5,345 per ton at its closing price on the LME last Friday. Zinc for delivery in three months plunged $310, or 9.1 percent, to $3,080 per ton, the biggest fall since July 1997.

On the Shanghai Futures Exchange yesterday, copper futures for delivery in three months fell 2,070 yuan, or 3.9 percent, to 49,780 yuan per ton, after declining 1.4 percent last Friday.

However, industry experts have remained optimistic about the longer-term future prices of base metals, especially copper. They suggest that this could be a good time to take a long-term, position despite the fact that global prices of base metals have been falling since last October.

A Shortfall in domestic inventories for both the exchange and producers would create space for a rebound of copper prices. And purchasing levels for copper are also expected to increase, experts said.

(China Daily 02/06/2007 page13)