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Monthly Archives: November 2010

Copper Has Biggest Weekly Drop in Three Months…

Copper Has Biggest Weekly Drop in Three Months as China's Demand May Wane

By Maria Kolesnikova and Yi TianNov 19, 2010

Copper fell in London, capping the biggest weekly loss in three months, on mounting concern that demand will slow in China, the world’s largest metals user.

China ordered banks to set aside larger reserves for the second time in two weeks, draining cash from the financial system to limit inflation. The requirement will increase 50 basis points starting Nov. 29, the central bank said on its website today.

“China needs to implement further measures to cool down the economy,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. Slower growth will limit demand for industrial metals at least in the short-term, he said.

Copper for delivery in three months declined $21, or 0.2 percent, to settle at $8,404 a metric ton ($3.82 a pound) on the London Metal Exchange at 6:11 p.m. local time. The price lost 2.4 percent this week, the most since the week ended Aug. 13.

On the Comex, copper futures for delivery in March were little changed, adding 0.4 cent to $3.8425 a pound in New York.

China’s economy grew 9.6 percent in the third quarter, the most among major economies, and the nation’s inflation rate is accelerating at the fastest pace in two years. The expansion helped fuel a 15 percent rally this year in copper prices in New York. Last week, futures touched a 30-month high and the metal climbed to a record on the LME.

‘Quicker Corrections’

“With each successive round of Chinese tightening, corrections could come our way more quickly and will exhibit much greater staying power,” Edward Meir, an analyst at MF Global Holdings Ltd. in Darien, Connecticut, said today in a report.

Copper stockpiles monitored by the Shanghai Futures Exchange have gained 45 percent since the end of September to the highest level in five months.

Striking workers at Anglo American Plc and Xstrata Plc’s Collahuasi mining unit are accepting a wage proposal, company spokeswoman Bernardita Fernandez said in an e-mailed statement today. The walkout at Collahuasi, the world’s fourth-biggest mine, entered its 14th day yesterday.

An end to the wage dispute “would take the risk premium out of copper,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.

Also on the LME, aluminum, zinc, lead, and tin fell. Nickel was unchanged.

To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net; Yi Tian in New York at Ytian8@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

Copper at 28-Month High on Growth Outlook, Weaker Currencies

 Copper at 28-Month High on Growth Outlook, Weaker Currencies

By Glenys SimNov 9, 2010

Copper in London and New York climbed to 28-month highs as investors sought alternatives to declining currencies amid prospects that economic growth will be sustained after the Federal Reserve expanded stimulus measures. The metal reached the highest in 32 months in Shanghai.

Copper for three-month delivery on the London Metal Exchange gained as much as 1.6 percent to $8,801 a metric ton, the highest level since July 2008, when it reached a record $8,940 a ton. The contract traded at $8,748.75 a ton by 4:02 p.m. Singapore time. The Fed last week said it will purchase an additional $600 billion of Treasuries through June to bolster the U.S. economy.

“The global economy will continue on its recovery path, and greater liquidity and prospects of inflation can only be bullish for commodities,” Wang Qianming, an analyst at Everbright Securities Co., said from Shanghai. “As liquidity expands outside China, investors are looking for a place that’s not stocks or currencies or bonds to put their money.”

December-delivery copper on the Comex in New York rose as much as 1.3 percent to $4.0090 a pound, trading above $4 a pound for the first time since July 2008. Futures in Shanghai gained as much as 2.9 percent to 68,520 yuan ($10,272) a ton, the highest price since March 2008.

China will strengthen the auditing of overseas fundraising and force banks to hold more foreign exchange as part of efforts to crack down on hot-money inflows, the State Administration of Foreign Exchange said in a statement on its website today. The government will also regulate Chinese special-purpose vehicles overseas and tighten controls on equity investments made by foreign companies in China, it said.

Weakening Currencies

The euro weakened to a one-week low against the dollar on concerns about sovereign debt in Europe. The pound dropped for a third day versus the greenback after a gauge of U.K.’s housing market slumped to an 18-month low.

A strike in Chile, the largest copper-producer, lent support to prices, said Wang. Anglo American Plc and Xstrata Plc kept their Collahuasi venture operating as usual as a strike by unionized workers at the world’s fourth-largest copper mine entered a fourth day, the company said yesterday. Output may be affected if the strike lasts longer than a week, Morgan Stanley said yesterday.

 

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