BLBG: Copper Falls in New York as Dollar Advances Most in Two Weeks
By Anna Stablum
Sept. 7 (Bloomberg) -- Copper fell in New York and London as the dollar jumped the most in more than two weeks, reducing demand for industrial metals as an alternative investment.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, added as much as 0.8 percent, the most since Aug. 20. Gains by the dollar make raw materials priced in the currency more expensive in terms of other monies. Copper also slid as a report showed an unexpected drop in factory orders in Germany, the world’s third-biggest consumer.
“The stronger dollar is the main factor,” said Robin Bhar, an analyst at Credit Agricole SA’s investment-banking unit in London. The euro fell after an industry group said the 10 largest banks in Germany, the world’s third-largest copper user after China and the U.S., may need fresh capital to meet new regulations.
Copper for delivery in December fell 5.9 cents, or 1.7 percent, to $3.441 a pound at 8:07 a.m. on the Comex in New York. Copper for delivery in three months dropped 2.1 percent to $7,545 a metric ton on the London Metal Exchange. All of the six main metals traded on the LME retreated except tin.
Deutsche Bank AG and other German lenders must raise about 105 billion euros ($134 billion) to reach an estimated 10 percent Tier 1 capital ratio, a key measure of financial strength, Dirk Jaeger, who is responsible for regulatory topics at the Association of German Banks, said yesterday.
Fewer Orders
“In Europe, concerns have arisen that the sovereign-debt crisis could still spread and pose a significant threat to the global recovery,” Walter de Wet, an analyst at Standard Bank Plc, said in a report today.
German factory orders, adjusted for seasonal swings and inflation, declined 2.2 percent in July from June, the Economy Ministry in Berlin said today. The drop, the biggest since February 2009, indicated the recovery in Europe’s largest economy is losing momentum.
Other figures scheduled for release this week may show that the U.S. trade deficit narrowed and fewer Americans applied for jobless benefits.
“The bulls have the momentum going for them,” said Alex Heath, head of industrial-metals trading at Royal Bank of Canada Europe in London. “Barring a stronger dollar move developing or a selloff in equities, I see the metals being bought on dips and a fresh look at the highs again.”
Copper reached a four-month high of $7,750 a ton on Sept. 3, helped by this year’s 21 percent drop in LME inventories of the metal. Today stockpiles dropped for a third day to 395,475 tons, the lowest level since Nov. 10, according to daily exchange figures.
Orders to draw copper from LME inventories, or canceled warrants, declined for a fourth day, sliding 5.4 percent to 24,700 tons.
Aluminum for three-month delivery on the LME fell 2.7 percent to $2,134 a ton and nickel slid 2 percent to $21,710 a ton. Zinc declined 1.3 percent to $2,167.75 a ton, tin was unchanged at $20,850 a ton and lead dropped 1.7 percent to $2,159.75 a ton.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.
