BLBG:Copper Drops as China Signals Housing Curbs Will Stay
Copper dropped for a second day after China, the world’s biggest consumer, signaled it would keep limits on its housing market, weakening demand for the metal used in pipes and wires. Nickel and aluminum also fell.
Copper for three-month delivery dropped as much as 0.6 percent to $8,411.25 a metric ton on the London Metal Exchange and traded little changed at $8,459 by 3:55 p.m. in Seoul. While the metal slipped 1.1 percent yesterday, the most since March 6, prices are up 11 percent this year. The May-delivery contract was little change at $3.8435 a pound on the Comex in New York.
Relaxing curbs on housing may cause “chaos,” Premier Wen Jiabao said yesterday. Construction generates about 40 percent of demand, according to the Copper Development Association. China’s home sales fell 25 percent in the first two months of the year after surging 26 percent in January and February of 2011. The government this month cut its target for annual economic growth to 7.5 percent from 8 percent.
“We continue to favor higher prices, but the increasing rhetoric about China is cause for concern,” RBC Capital Markets said in a report e-mailed today.
Stockpiles (SHFCCOPD) of copper tracked by the Shanghai Futures Exchange were the highest since at least 2003, figures showed last week. The June-delivery contract on the Shanghai exchange fell 0.2 percent to 60,420 yuan ($9,546) per ton.
“One should be concerned about what’s happening in the China property market,” said Adrian Mowat, JPMorgan Chase & Co.’s Hong Kong-based chief Asian and emerging-market equity strategist. China’s economy is in a “hard landing,” Mowat said yesterday at a conference in Singapore.
U.S. Economy
Prices also slid as the dollar strengthened after the Federal Reserve raised its assessment of the U.S. economy.
The Fed this week said it expects “moderate economic growth” and kept its benchmark interest rate target in a range of zero to 0.25 percent, where it’s been since December 2008. The greenback rose as much as 0.2 percent against a basket of six currencies, climbing for a third straight session and making dollar-priced metals more expensive in terms of other monies.
On the LME, nickel slipped 0.9 percent to $19,395 a ton and aluminum fell 0.2 percent to $2,225 a ton. Zinc gained 0.2 percent to $2,079 per ton and lead rose 0.4 percent to $2,109.75 a ton. Tin climbed 0.4 percent to 23,900 a ton.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
