BS: Copper May Fall as Investors Sell to Lock In Gains After Jump
By Anna Stablum
June 25 (Bloomberg) -- Copper may fall in New York, paring a weekly climb, as concern that the world economic rebound may falter spurs some investors to sell the metal to lock in gains.
Prices jumped on June 21 as China, the world’s biggest copper user, signaled an end to the yuan’s fixed rate to the dollar. They slid later in the week as reports indicated further weakness in the U.S. housing market. Group of 20 leaders meet this weekend in Toronto to discuss policies aimed at addressing Europe’s debt crisis and spurring global growth.
“The downside is supported, but with all the worries about growth and sovereign debt, rallies are going to be sold into,” said Robin Bhar, an analyst at Credit Agricole CIB in London. “We are moving into the slow summer period, so if anything, we are probably going to drift gradually lower again.”
Futures for September delivery slipped 0.08 cent, or 0.3 percent, to $3.016 a pound at 8:40 a.m. on the Comex in New York. The contract is up 3.9 percent this week, heading for the biggest gain since the week ended April 2. Copper for delivery in three months fell 0.7 percent to $6,645 a metric ton on the London Metal Exchange.
Comex prices added as much as 5.1 percent, the most in a month, on June 21 after the People’s Bank of China indicated it would abandon the peg of 6.83 yuan to the dollar. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, slid as much as 0.7 percent that day, making dollar-priced metals cheaper in terms of other monies.
Stronger Dollar
“Initially the Chinese news was seen as positive, and that sort of dissipated,” Bhar said.
The dollar index is up 10 percent this year, contributing to LME copper’s 9.6 percent decline along with concern about monetary tightening in China. Tin, ahead 6.9 percent, has taken over from nickel as the best performer in 2010 among the six main metals traded on the LME.
G-20 policy makers are at odds over whether fiscal austerity will lead to recovery or another recession. European officials fear failure to patch up public finances now risks reviving a bond-market selloff that required a bailout for Greece, while President Barack Obama says deficit reduction could hurt economic growth and employment.
“I am still concerned about debt around the world,” investor Jim Rogers, chairman of Rogers Holdings, said in an interview with Bloomberg-UTV television today. He continued to predict higher raw-materials prices, though. “I am long commodities,” Rogers said.
Higher Taxes
Governments in European nations including Spain and the U.K. are freezing pay for state workers, raising taxes and taking other steps intended to help reduce borrowing.
Nine of 17 analysts, investors and traders surveyed by Bloomberg, or 53 percent, said copper will decline next week after the reports on housing in the U.S., the world’s second- largest consumer of the metal.
Sales of new homes in the U.S. plunged by a record 33 percent last month, Commerce Department figures showed on June 23. Sales of previously owned homes, which make up most of the market, unexpectedly fell in May, a report showed a day earlier. Construction accounts for a quarter of copper demand, according to the Copper Development Association.
First-quarter growth in the U.S. economy was weaker than previously calculated, figures from the Commerce Department showed today. Gross domestic product expanded at a 2.7 percent annual rate, compared with last month’s 3 percent estimate.
Stockpiles of copper tracked by the LME fell for a sixth day to 454,250 tons, the lowest level since Dec. 8. Bookings to remove metal from warehouses jumped for a second day to 30,975 tons, the highest since March 5. Copper stockpiles monitored by the Shanghai Futures Exchange declined 12,005 tons this week to 123,939 tons, the bourse said today.
Aluminum for three-month delivery on the LME rose 0.4 percent to $1,973 a ton and nickel climbed 0.6 percent to $19,525 a ton. Zinc fell 1.6 percent to $1,846 a ton, lead gained 0.7 percent to $1,833 a ton and tin fell 0.1 percent to $18,125 a ton.
--With assistance from Madelene Pearson in Mumbai, Glenys Sim in Singapore and Aya Takada and Yasumasa Song in Japan. Editors: Dan Weeks, Claudia Carpenter.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.
