SF: Copper Falls Most in a Week on Concern China Demand to Dwindle
June 3 (Bloomberg) -- Copper prices fell the most in a week on concern that demand for the metal will decline in China, the world's biggest consumer.
Freeport-McMoRan Copper & Gold Inc. and Codelco, the world's largest producers, said China's plans to curb its economy threaten to reduce demand. Before today, copper prices fell 17 percent from a 20-month high in April as China acted to cool its property market and Europe struggled with fiscal woes.
"China is the biggest user, so any concerns about demand there will continue to be a drag on copper," said Donald Selkin, the chief market strategist at National Securities Corp. in New York. "People are more concerned about what's happening overseas in Asia and Europe than with what's going in the U.S."
Copper futures for July delivery fell 9.9 cents, or 3.3 percent, to $2.9415 a pound at 11:24 a.m. on the Comex in New York. A close at that price would be the biggest decline for a most-active contract since May 25.
The copper market will be "volatile" for as much as another year, Codelco Chief Executive Officer Diego Hernandez said yesterday in an interview. China is a "risk to the world's marketplace in the near term," Freeport CEO Richard Adkerson said in an interview.
Prices also fell as a gain in the dollar curbed demand from investors who buy commodities as alternative assets, Selkin said. The greenback rose for a fifth straight day against a basket of six currencies.
Euro, Dollar
"Metals are going to struggle to gain any upside momentum until the euro finally finds some stability and the dollar tops out of this run," said Alex Heath, the head of industrial- metals trading at RBC Capital Markets in London.
Xstrata Plc, the fourth-biggest copper producer, said it shelved spending on projects valued at A$6.6 billion ($5.6 billion) in Australia because of a planned tax on mine profits.
Inventories of copper tracked by the London Metal Exchange dropped for a 12th day to 474,300 metric tons. Supplies tracked by the LME are still up 55 percent in the past 12 months.
"Stocks remain high, and drawdowns will likely slow as we move into summer," Heath said. "Perhaps we even see increases that will also act as a significant drag anchor until we move into the fourth quarter."
Copper for delivery in three months dropped $165, or 2.5 percent, to $6,503 a ton ($2.95 a pound) on the LME.
Nickel, aluminum, lead, zinc and tin also fell.
--With assistance by Elisabeth Behrmann in Sydney, Firat Kayakiran in London, Sara Eisen in New York and Matt Craze in Santiago. Editors: Steve Stroth, Patrick McKiernan.
