Shanghai copper defies meltdown

Copper rose in Shanghai on Thursday, after coming under pressure earlier from tumbling equities markets, as investors bought the metal on demand from China, the world's biggest consumer, and on labour unrest at mines in Mexico.

Shanghai copper bucked the trend in an otherwise bearish metals market across the world today because of global equity markets slump.

China's imports of refined copper and alloys gained in July for the first time since March, rising 3.4 per cent from June, the customs office said yesterday. Imports in the first seven months more than doubled to 1.11 million tonnes from a year ago.

"Fundamentals are supportive,'' said Li Jingyuan, an analyst at Haifu Futures Co. "The one thing that has dragged copper down is the world equity slump and it may have bottomed out.''

Copper for October delivery on the Shanghai Futures Exchange rose 100 yuan, or 0.2 per cent, to close at 64,400 yuan ($8,474) a tonne, after falling as much as 1.2 per cent earlier. The metal in Changjiang, Shanghai's biggest cash market, rose as much as 1 per cent to 64,030 yuan a tonne today.

However, copper for delivery in three months slid 1.3 per cent to $7,215 a tonne on the London Metal Exchange at 4:34 pm Shanghai time, as investors sold metals and other commodities to cover losses on equities. The Morgan Stanley Capital International Asia Pacific Index, a regional equity benchmark, was set for its biggest decline since June 2006, wiping out gains for the year.

Other metals: Zinc in Shanghai for October delivery fell 2.3 per cent to 27,100 yuan a tonne, while October-delivery aluminium was down 0.7 per cent at 19,250 yuan. Zinc for delivery in three months on the London Metal Exchange fell 1.6 per cent to $3,180 a tonne at 4:38 pm Shanghai time, while aluminium was 0.8 per cent down at $2,522.75 a tonne.

Oil leads rout: Oil and industrial metals such as nickel and zinc led a decline in commodity prices as concern mounted that losses in global credit markets would erode economic growth and demand for raw materials.

Crude oil for September delivery declined $1.20, or 1.6 per cent, to $71.80 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Zinc for delivery in three months on the London Metal Exchange fell $22, or 0.7 per cent, to $3,208 a tonne.

Investors are selling all but the safest assets to cover losses as banks put a squeeze on credit amid rising subprime defaults.

Stocks in Europe tumbled while the Morgan Stanley Capital International Asia Pacific Index, a regional equity benchmark, dropped the most in more than a year.

"Investors are looking for liquidity and commodities are getting hurt as a result,'' said Jochen Hitzfeld, a Munich-based analyst at UniCredit. "Metals and oil are more vulnerable because they are strongly linked with the economic cycle.''

Platinum down: Platinum futures in Tokyo fell to a four-month low as a global plunge in stock prices prompted investors to convert assets, including precious metals, into cash.

Asian stocks fell the most in a year after Australia's Rams Home Loans Group said it had been unable to refinance $5 billion of short-term US loans as a credit crunch deepens.

"People are seeing their stocks absolutely get tanked,'' Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said today. "It looks quite bearish for platinum.''

Platinum for June delivery dropped 87 yen, or 1.8 per cent, to close at 4,641 yen a gram ($1,244 an ounce) on the Tokyo Commodity Exchange. It earlier fell to 4,634 yen, the lowest since March 29.