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BASE METALS: Copper Falls On China Bank Reserve Requirements
Aug 30,2011 08:32CST
industry news
Source:SMM
Copper futures slipped Monday in thin trading on worries that moves by China's central bank to tighten lending may curb purchases of the industrial metal.

Aug 29, 2011 NEW YORK (Dow Jones)--Copper futures slipped Monday in thin trading on worries that moves by China's central bank to tighten lending may curb purchases of the industrial metal.

The most actively traded copper contract, for September delivery, recently traded 3 cents, or 0.7%, lower, at $4.069 a pound on the Comex division of the New York Mercantile Exchange.

The People's Bank of China will require banks to hold more types of deposits in reserve beginning Sept. 5, according to a memo from the central bank seen by Dow Jones Newswires.

China has taken steps during the last year to cool its fast-growing economy, raising the amount of money lenders must have on hand and increasing interest rates. The moves have led to worries that the tightening may upset growth and slash demand in the world's largest metals consumer.

Worries that a firmer grip on credit would upset China's appetite for raw materials was a key driver in copper's retreat from record highs above $4.60 a pound early this year.

China accounted for about 40% of the world's refined copper consumption last year.

"The potential for more Chinese participation is there," said Frank Lesh, a broker and analyst with FuturePath Trading. "Although they're not buying big time, at least they're buying something."

Benchmark November-delivery copper on the Shanghai Futures Exchange rose 0.2%.

Trading desks in London, a key hub for metals trading, were closed Monday for a U.K. bank holiday. U.S. trading activity was also curbed by thinner-than-normal staffing as some employees couldn't make it to work after Hurricane Irene hit New York and other East Coast cities during the weekend, disrupting major transit arteries.

 

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