Copper declined for the first time in seven days on concerns that China’s plan to tame inflation even as the economy slows may hurt demand for metals. Zinc and lead also fell. Three-month delivery copper on the London Metal Exchange retreated as much as 0.9 percent to $9,190 a metric ton and traded at $9,210 at 11:31 a.m. Shanghai time. The contract lost 5.7 percent in August, the first loss in three months. Zinc dropped 1 percent to $2,266 a ton. A manufacturing index in China, the biggest user of copper, stayed near the borderline between expansion and contraction in August. The Purchasing Managers’ Index rose to 50.9, from a 29- month low of 50.7 in July, the China Federation of Logistics and Purchasing said in a statement today. That compared with the median estimate of 51 in a Bloomberg News survey of 14 economists. A reading above 50 indicates an expansion. “Data showed there is no hard-landing risk,” Zhang Yu, an analyst at Yong’an Futures Co., said by phone from Hangzhou. Still the expectation is that monetary tightening measures will remain in place as inflation is unlikely to ease soon, she said. Five increases in interest rates since October, limits on home purchases and lending curbs that included raising banks’ reserve requirements to a record are slowing domestic demand in the world’s second-largest economy. Inflation reached a three- year high of 6.5 percent in July. Inflation Focus Premier Wen Jiabao said that a faltering global recovery and turbulence in financial markets have yet to convince his government to switch from a focus on taming inflation. The slowdown in the economy is “reasonable” and within government expectations, Wen wrote in an article in the ruling Communist Party’s Qiushi magazine published today. An abstract was posted on the government’s website yesterday. Copper for November delivery on the Shanghai Futures Exchange gained 0.4 percent to 68,640 yuan ($10,760) a ton. “Fundamentally, upside for metals remains capped,” Walter de Wet, an analyst at Standard Bank Plc., said in a research report yesterday. “As a result a rally in base metals is more likely to be on an increase in speculative activity rather than more sustainable real demand.” He added copper is facing large technical resistance between $9,220 and $9,300. Anglo American Plc and Xstrata Plc’s Collahuasi copper mine in Chile expects output to drop for a fourth consecutive year in 2012 because of lower-quality ore, said Chief Executive Officer Giancarlo Bruno in Santiago yesterday. A turnaround in output will occur at the end of 2012 when the company completes an expansion that will tap richer ore at the mine in northern Chile, Bruno said. Aluminum in London lost as much as 0.3 percent to $2,461 a ton. Goldman Sachs Group Inc. in a report yesterday lowered its estimates for aluminum prices through 2013, citing “weaker” growth in developed economies. Lead dropped 0.8 percent to $2,560 a ton and tin declined 0.6 percent to $24,250 a ton. Nickel was unchanged at $22,200 a ton. To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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