Metals News
Copper Declines a 2nd Day on Stockpile Increase, China Tightening Concerns
industry news
Dec 17,2010

Dec 17 (Bloomberg) --  Copper declined for the second straight day in New York on speculation that China may increase borrowing costs to damp accelerating inflation.

China, the world’s largest metal consumer, may raise interest rates as many as six times by the end of next year, according to Mizuho Research Institute Ltd. Copper has surged 43 percent since July 1, partly as demand from emerging markets reduced global inventories.

"China tightening is an overhang,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. "It’s over the shoulders of everybody.”

Copper futures for March delivery fell 1.65 cents, or 0.4 percent, to close at $4.116 a pound at 1:12 p.m. on the Comex in New York. Yesterday, the price dropped 1.8 percent, the biggest decline for a most-active contract since Nov. 22. On Dec. 14, the metal jumped to a 31-month high of $4.229.

Inventories tallied by the London Metal Exchange rose for the fourth consecutive day to 360,800 metric tons, the highest since Nov. 17. Orders to draw copper from LME stockpiles, or canceled warrants, fell for the 12th session to 18,700 tons, the lowest since Oct. 6.

"If the trend continues, it will cause many to ask just how tight the market really is,” Alex Heath, the head of industrial-metal trading at Royal Bank of Canada Europe Ltd. in London, said in an by e-mail.

Copper for delivery in three months dropped $104, or 1.1 percent, to $8,991 a metric ton ($4.08 a pound) on the LME. The price rose to a record $9,267.50 on Dec. 14.

Lead, aluminum and zinc also fell in London. Nickel and tin gained.




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