MW: Copper falls on worries over China demand; gold dips
Copper futures fell more than 2% Monday, pacing losses in crude oil and stocks, on worries that demand from China, the world's biggest copper consumer, may slow. Gold moved slightly lower.
Copper for July delivery lost 5.85 cents, or 2.7%, to $2.087 a pound on the Comex division of the New York Mercantile Exchange. Copper had gained more than 2% last week.
June gold fell $3.40, or 0.4%, to $911.50 an ounce, after rising 3% last week.
The decline in copper came after a sharp drop in futures trading in Shanghai. Weighing on sentiment was a 45% jump in Shanghai copper stocks last week to their highest level since the end of March, said analysts led by Alex Heath at RBC Capital Markets.
China's State Reserves Bureau is believed to have bought more than 300,000 tons of copper since March. But some analysts expected the country's imports will slow down in the next few months.
"Physical copper premiums were steady across much of Asia last week as supplies in the region eroded, but easing tightness in China hinted that the dragon's appetite for the metal may be waning," said analysts at RBC Capital.
Meanwhile, China's State Council, the country's cabinet, said on Monday that the country will restrict new aluminum projects for three years and push for consolidation of base-metals production.
The State Council's plan will seek to have three to five big firms by 2011. By that time, the top 10 firms are to control 90% of copper production, 70% of aluminum, 60% of lead and 60% of zinc.
On the London Metal Exchange, copper inventories fell to 389,000 tons Friday, according to the latest data from the exchange. That's down 4,900 tons from a day ago and 115,200 tons from a month ago.
Gold dips
Gold had risen last week as the U.S. dollar moved lower and as investors bought the precious metal on worries that central banks' effort to pump liquidity into the market could raise inflation in the long term.
The greenback regained some strength Monday against the euro and the British pound. A stronger dollar tends to push down dollar-denominated gold prices.
In other metals Friday, July silver sank 8.5 cents, or 0.6%, to $13.87 an ounce. June palladium lost $5.80, or 2.4%, to $236.50 an ounce, and the July contract for platinum declined $27.30, or 2.4%, to $1,119.80 an ounce.
