BLBG: Copper Prices Drop From Record as China Raises Interest Rates
Copper fell from a record in New York as higher borrowing costs in China, the world’s biggest user, signaled slower economic growth and metal demand.
China lifted interest rates for the third time since mid- October before a report forecast to show that inflation expanded at the fastest pace in 30 months. In January, Chinese imports were likely “flat or significantly weaker than in December,” Citigroup Inc. said. The metal has surged 57 percent in the past year amid rising demand.
The rate increase “is a welcome reminder that although the medium-term global-demand outlook remains constructive, measures need to be taken to prevent overheating in China,” said Daniel Major, an analyst at RBS Global Banking & Markets in London. “This has potential to cap further upside for industrial metals in 2011.”
Copper futures for March delivery slid 0.1 cent to close at $4.574 a pound at 1:17 p.m. on the Comex in New York. Yesterday, the price reached an all-time high of $4.6375 before erasing gains.
“The Chinese rate hike will impact demand for copper,” Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago.
In December, imports into China declined 2 percent from a month earlier, customs data showed. Inventories tallied by the Shanghai Futures Exchange rose 3.9 percent last week to the highest since June.
China’s financial markets open tomorrow after the weeklong Lunar New Year holiday.
On the London Metal Exchange, copper for three-month delivery added $15, or 0.1 percent, to $10,060 a metric ton ($4.56 a pound). Earlier, the price fell as much as 1.6 percent. Yesterday, the metal climbed to a record $10,160.
Lead declined in London. Zinc, nickel, tin and aluminum rose.
To contact the reporters on this story: Maria Kolesnikova in London 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
