LONDON: While stock markets plunge in 2008, some of the physical building blocks of economic growth - metals like copper and aluminum - have defied fears of bad times ahead for the world economy by jumping in price by as much as 30 percent.

Investors seeking profits as other parts of the economy suffer have poured money into the sector, and now some analysts believe that speculative fervor has overcome fundamental logic.

An argument to justify buying copper as it trades at more than $8,000 a ton, more than four times its price four years ago, is that strong demand from China and other emerging economies will offset lower use in a slowing U.S. economy.

Would China, the worlds biggest user of copper, be able to ignore completely a recession in the United States, its biggest export market?

“China and India can plough their own furrow more than most,” said Michael Dicks, head of research and investment strategy at Barclays Wealth. “But can they literally decouple? No.”

The effect on China of a U.S. recession may be diluted, but there will still be an effect.

“If the U.S. gets the flu, China gets a cold - theyve got to go in the same direction,” Dicks said.

Demand for copper outstripped production by almost 150,000 tons in the first 11 months of last year, according to the latest figures from the International Copper Study Group.

This picture of tight or insufficient supply has attracted a huge amount of money to copper, but, in a market of more than 16 million tons, the deficit is marginal.

“As long as copper demand remains strong,” said Dan Smith, an analyst at Standard Chartered, “people are going to look at it as an attractive market, but if slower numbers come out of China as a result of a global slowdown, it could pull the rug out from under it.”

If copper prices do fall, then investors who entered the market around the time prices hit an all-time high of $8,820 in early March, may face big losses.

“With copper above $8,000, the risk-reward is really not in the markets favor,” Smith said. “If the market softens, it could tank quite quickly.”

This could leave a lot of money at risk.

A survey published by Barclays Capital on Monday put total investment in commodities, including metals, at $178 billion in 2007, and the bank expects this figure to exceed $200 billion by the end of this year.

The flow of money itself is a powerful and persuasive dynamic, says Tiberius, the Swiss-based commodities investment firm.

“These enormous capital inflows are already causing considerable price distortions in some of the smaller, less-liquid markets,” it said in a report. “In many cases, it seems that unfavorable fundamental factors are being completely ignored.”

The rapid ascent in metals prices since the start of the year was a shock even to Tiberiuss fund managers.

The report said that the bull market for industrial metals was “a surprise, given that economic indicators point to a continuing slump in the U.S.”

“As far as the industrial metals go, the cyclical component of demand seems to be causing market surpluses in 2008.”

Even if there was a widespread expectation that supply would grow this year, demand for access to commodities is fierce, said Dicks, of Barclays Wealth.

“Almost regardless of fundamentals, there is momentum there from people buying into the idea,” he said. “It can be oil, metals, can be soft commodities. Whatever you are offering people at the moment, they want to buy it.

“You might call it a bubble, but its something that you dont fight at the moment. Everybody wants a slice of the action.”

As long as metals go on making money, that will be enough to justify more investment.

“Its the only real asset class that appears to be putting in any kind of performance,” said Robin Bhar, a metals analyst at UBS in London. “Simply, the weight of money is lifting prices above whats justified fundamentally.”

(03-12) 06:24 PDT WASHINGTON (AP) —

For years, the U.S. Postal Service has wanted to offer volume discounts on shipping and premium mail services. Now, it is about to begin doing so.

Beginning May 12, shippers using Express Mail, Priority Mail and certain parcel services will be able to get discounts for large and medium volume contracts, the agency said Wednesday.

The Postal Service had announced last month that the price for sending first-class mail would go up a penny Д to 42 cents Д on that date. But it did not announce new shipping rates at the time.

The February announcement did prompt people to stock up on Forever Stamps, which will sell for 41 cents until rates go up, but will remain valid for postage after that date without any additional stamps. Sales of Forever stamps jumped $95 million in February, compared to January.

Most of the newly announced changes apply to businesses, but flat rate prices for residential and other small customers will still be available, and they will be eligible for a 3 percent discount for buying postage online.

Under the new rates, the Express Mail flat-rate envelope will go up a quarter to $16.50.

The Priority Mail regular flat-rate box increases to $9.80 from $8.95, and the price for a Priority Mail flat-rate envelope increases to $4.80 from $4.60.

There will be no price change for the new larger Priority Mail Flat-Rate Boxes that went on sale March 3. The new boxes will continue to cost $12.95 to mail domestically and $10.95 to mail to military APO/FPO addresses.

A new law restructuring postal operations allows the agency to drop its one-price-fits-all charges for shipping and to offer discounts for large volume shippers. The new approach, largely applicable to business, will include commercial volume pricing, minimum volume rebates, online price breaks and other pricing incentives, the agency said.

It said that its overnight Express Mail service will switch to a zone-based pricing system, resulting in lower prices for closer destinations.

Customers will be offered a 3 percent price reduction by purchasing Express Mail online or through corporate accounts and an additional 7 percent price reduction will be available for those who meet quarterly volume minimums.

Priority Mail will be eligible for an average 3.5 percent savings to customers who use electronic postage or meet other requirements.

Parcel Select Д in which a company brings the material to a local post office and the Postal Service carries it the “last mile” to the customer Д will have volume incentives for large- and medium-sized shippers.

Parcel Return Service, in which customers can return items to businesses, will move entirely to a weight-based pricing system, resulting in price reductions for lighter packages.

A detailed rundown on the new prices is available at usps.com/prices.

(03-12) 07:37 PDT ATLANTA, (AP) —

UPS Inc. may not meet its first-quarter earnings guidance and plans to focus more on growth opportunities overseas because of the uncertain U.S. economy, executives of the world’s largest shipping carrier said Wednesday.

The disclosures came at an investor conference in New York that was broadcast on the Internet.

CEO Scott Davis said the Atlanta-based company still considers its domestic market to be important to its future.

But he noted that U.S. “economic forecasts for this year are uncertain at best.” Davis said the company can’t rely on U.S. package volume growth alone. International growth will become more important in the future, he said.

“One of our real strengths is our balanced global presence,” Davis said.

China, India and Europe provide good growth opportunities for UPS, said David Abney, the company’s chief operating officer.

The need for more international growth was underscored when Chief Financial Officer Kurt Kuehn disclosed during the conference that UPS may not meet its first-quarter financial guidance because of the slowing U.S. economy.

Kuehn said the first three weeks of January saw strong volume growth, but that was later followed by six weeks of negative growth.

He said that if the recent trends continue through the end of the first quarter on March 31, the guidance the company previously gave will be difficult to achieve. Kuehn said UPS remains comfortable with its annual guidance.

UPS said Jan. 30 that earnings per share for the first quarter were expected to be within the range of 94 cents to 98 cents. For the full year, UPS said at the time that it expects earnings per share to be between $4.30 and $4.50.

UPS shares fell $1, or 1.4 percent to $71.79 in morning trading Wednesday.

Davis said Wednesday that UPS also will continue to use technology to improve efficiency and financial results. He said growing Internet commerce offers more opportunities for UPS.

“I am confident we can deliver long-term results,” Davis said.

Last month, UPS said a bookkeeping error caused it to inflate its reported earnings for the fiscal 2007 fourth-quarter and full-year by $65 million.

The error meant the company missed Wall Street expectations instead of meeting them, as reported previously.

It revised its results, which it first reported on Jan. 30, to fix the discrepancy.

UPS expects to make $3 billion in capital expenditures in 2008, at the low end of its historical range.

The company has said this year will involve both challenges and opportunities for UPS, also known as United Parcel Service.

___

On the Net:

UPS Inc.: «www.ups.com»