BLBG: Copper Declines in London on Dollar; Shanghai Jumps After Break
By Bloomberg News
Feb. 22 (Bloomberg) -- Copper dropped from a four-week high in London as a stronger dollar reduced the investment appeal of raw materials. The prices in Shanghai jumped as trading resumed after the Lunar New Year holidays.
Three-month delivery copper slid as much as 1.6 percent to $7,315 a metric ton on the London Metal Exchange and traded at $7,340 at 2:33 p.m. in Shanghai. The May-delivery contract on the Shanghai Futures Exchange climbed as much as 6.4 percent to 60,000 yuan ($8,789) a ton, the highest level since Jan. 26. It closed at 59,010 yuan.
The dollar advanced last week against most of its major counterparts as the Federal Reserve’s rate increase damped investor appetite for riskier assets. London copper last week rose 9.1 percent, the most in seven months, on an improved U.S. economic outlook.
“Copper retreated in London due to a stronger dollar, and narrowed gains in Shanghai accordingly,” Jin Shan, a trader at Minmetals Star Futures Co., said from Shenzhen, Guangdong province today.
London copper last week advanced after reports showed U.S. industrial output and home-construction starts rose last month, easing concern that the economic recovery may falter. The metal gained even as the Fed raised the discount rate for the first time in more than three years, and China increased bank reserve requirements for the second time in a month.
“A slew of good-looking economic data from the U.S. boosted optimism, offsetting the impact of monetary-tightening policies,” said Zeng Chao, an analyst at Everbright Futures Co. A strong dollar may cap the rally in copper, he said.
The greenback climbed to the highest level since June 2009 against a basket of six major currencies on Feb. 19. The dollar index was down 0.2 percent at 80.465 as of 2:35 p.m. in Shanghai.
‘Weaker Fundamentals’
Shanghai zinc increased as much as 6.2 percent to 19,480 yuan a ton. London zinc declined 2.2 percent to $2,313 a ton. China’s markets were shut last week.
“Zinc’s gain is following copper, albeit at a softer pace due to its weaker fundamentals,” said Chen Jian, an analyst at Minmetals Haiqin Futures Co. in Beijing.
Copper, used in homes and power grids, tumbled earlier this month to the lowest level since October as tightening policies in China, rising job losses in the U.S. and widening deficits in Europe fueled investor concern that the pace of the global economic recovery is slowing. China and the U.S. are the largest consumers of the metal
Aluminum in London was little changed at $2,140 a ton. United Co. Rusal, the world’s biggest aluminum producer, will increase output by 3 percent this year, having seen “the first signs of a recovery” after the global recession, according to a company filing today.
Lead lost 0.8 percent to $2,340 a ton, nickel slid 0.1 percent to $20,704 a ton, tin declined 0.3 percent to $16,950 a ton as of 2:46 p.m. in Shanghai.
