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Copper Drops in New York on Concern Chinese Lending Curbs May Hurt Demand
Aug 30,2011 10:04CST
industry news
Source:SMM
Copper futures declined in New York on concern that moves to curb credit growth and tame inflation by China, the world's biggest consumer of the metal, may reduce demand for raw materials.

Aug. 29 (Bloomberg) –Copper futures declined in New York on concern that moves to curb credit growth and tame inflation by China, the world's biggest consumer of the metal, may reduce demand for raw materials.

December-delivery copper fell as much as 1 percent to $4.0755 a pound on the Comex in New York before trading at $4.104 by 10:12 a.m. London time, declining for the first day in five.

China is extending reserve requirements to margin deposits that commercial banks collect from customers, a move that may drain 900 billion yuan ($141 billion) from the banking system over six months, Bank of America Merrill Lynch economist Lu Ting said in a Aug. 26 note. Mizuho Securities Asia Ltd. cited similar information. A central bank media official declined to comment.

The move "showed the country's resolve to control inflation, which is slightly bearish for the base-metals market as it crimps money liquidity," Che Hongyun, an analyst at Galaxy Futures Co., said by phone from Shanghai today.

Copper for November delivery rose 0.2 percent to 67,350 yuan a metric ton on the Shanghai Futures Exchange. The London Metal Exchange is closed today for a holiday.

Copper stockpiles fell 8.7 percent to 102,258 tons last week, the Shanghai exchange said Aug. 26. Production of the metal in China climbed 15 percent from a year earlier in the first seven months, data showed on Aug. 9.

"It's possible that China has stepped into the copper peak consumption season ahead of normal because the big users such as wire and cables are now seeing more orders with expansion of China's power network project," Che said.

Aluminum for November delivery in Shanghai slipped less than 0.1 percent to 17,360 yuan a ton and zinc for delivery the same month rose 0.4 percent to 17,115 yuan a ton.

 

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