BLBG: Copper Drops for Second Day as Rally to Record Discourages Chinese Buying
Copper declined for a second day in London as the metal’s rally to a record deterred purchases in China, the largest user. Shanghai futures also dropped.
Three-month copper on the London Metal Exchange dropped as much as 0.9 percent to $9,266.25 a metric ton and traded at $9,295 at 1:50 p.m. in Singapore. The contract fell for the first time in four days yesterday, after reaching a record $9,392 a ton on Dec. 21.
“We’re bound to see demand destruction from price- sensitive Chinese buyers, more so because we’re currently in the slow consumption season,” said Yang Jun, a Beijing-based analyst at Hongyuan Futures Co.
Futures on the Comex in New York fell as much as 0.9 percent to $4.238 a pound after reaching a record $4.2965 yesterday. The metal for March-delivery on the Shanghai Futures Exchange was 0.2 percent lower at 68,550 yuan ($10,314), after gaining as much as 0.7 percent earlier.
Inventories monitored by the London Metal Exchange rose for the eighth consecutive session to the highest since Nov. 10 yesterday. Stockpiles monitored by the Shanghai Futures Exchange gained 10 percent to a six-month high last week.
“I don’t think we’re going to see big moves until the end of the year as the medium to longer-term fundamentals remain solid,” said Yang.
The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal next year, prompting analysts including those at Goldman Sachs Group Inc. and Standard Chartered Plc to call for higher prices in 2011. Jeremy Gray, Standard Chartered’s global head of equity research for resources, forecast in an August report that copper may rise to $12,000 a ton in the next two years.
Aluminum in London dropped 0.2 percent to $2,458 a ton, while nickel gained 0.2 percent to $24,096 a ton. Zinc fell 0.6 percent to $2,315 a ton, lead gained 0.3 percent to $2,446 a ton, while tin slipped 0.5 percent to $26,700.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
