Copper fell to the lowest in more than a week as industrial metals dropped on concern that conflict in Libya and Middle East unrest may sustain an oil rally, curbing the economic recovery and hurting demand. Three-month-delivery copper dropped 0.9 percent to $9,415.25 a metric ton on the London Metal Exchange at 1:04 p.m. in Singapore, extending a 4 percent slump yesterday, the steepest loss since Nov. 16. Nickel and tin both declined to the lowest since Jan. 31. Oil closed at a 29-month high in New York yesterday on concern Libyan violence would crimp Middle Eastern supplies. Government warplanes repeatedly bombed rebel positions near the oil hub of Ras Lanuf, adding urgency to discussions among U.S. and allied governments about imposing a no-fly zone. “This kind of volatility is going to continue until the market has some clear sight on both oil-price elevation and on how long the impact of this oil price is going to be,” Peter Richardson, chief metals economist at Morgan Stanley in Melbourne, said today by phone. “The market believes there will be a negative impact on growth from a period of sustained oil prices,” he said. Copper has lost 1.6 percent this year. Prices more than trebled since the end of 2008, driven by consumption growth in China and as the U.S. recovered from the worst recession since the 1930s. The two countries are the largest copper users. Interest Rates Rising oil prices may quicken inflation. Central banks in Thailand and South Korea will raise key interest rates this week by a quarter of a percentage point, median estimates in Bloomberg News surveys of economists show. The People’s Bank of China raised interest rates three times since October. “It was another shock about oil, causing growth expectations to be reduced,” said Dominic Schnider, director for wealth management research at UBS in Singapore. “At the end of the day, copper is the bellwether of the economy.” Stockpiles tracked by exchanges in London, New York and Shanghai have climbed 16 percent this year to 660,456 tons as of yesterday, the highest level since July, according to Bloomberg data. Copper inventories in South Korea, the nearest LME- registered warehouse location to China, more than doubled this year to 102,225 tons. Copper for May delivery in Shanghai tumbled as much as 5 percent to 70,530 yuan a ton ($10,740), the lowest since Jan. 26, and last traded at 70,880 yuan. Imports by China last month probably fell 15 percent from January, and the recovery in demand may be delayed until late March, Dan Smith, a Standard Chartered Bank analyst, said in a report. Shipments probably fell to 210,000 tons, partly because of the Lunar New Year holiday and higher prices, he said. Aluminum fell 0.2 percent at $2,554 a ton in London, while zinc increased dropped 0.2 percent to $2,365 a ton. Lead declined 1.2 percent to $2,556 a ton, nickel fell 1.5 percent to $27,075 a ton and tin slumped 2.4 percent to $30,000 a ton. To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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