Copper Declines in Shanghai on China Economic Uncertainties

BEIJING, Sept. 21 -- Copper declined in Shanghai on concern that demand in China, the world's largest user of the metal, may slow.

    China, the world's third-largest economy, faces an "arduous task" in maintaining steady growth and a stable society, President Hu Jintao said yesterday. China's stocks fell for a second day today and posted its first weekly decline in three last week.

    "Sentiment is cautious as China approaches the October national holiday and memories of the financial market plunge at this time last year are still fresh," Zeng Chao, an analyst at Everbright Futures Co., said in an e-mailed report today.

    Copper for December delivery dropped as much as 2 percent to 47,700 yuan ($6,985) a ton on the Shanghai Futures Exchange and traded at 48,630 yuan at the 11:30 a.m. local time break.

    Three-month delivery copper on the London Metal Exchange rose 0.2 percent to $6,185 a ton at midday in Singapore after slumping 3.3 percent on Sept. 18.

    China is in the "critical phase" of ensuring economic growth, China National Radio reported Sept. 18, citing the Fourth Plenary Session of the 17th Communist Party of China Central Committee.

    The country will mark the founding of the People's Republic in 1949 on Oct. 1 as the government helps fuel a recovery from the deepest global recession since World War II with a $586 billion stimulus plan.

    Stockpiles Gain

    Stockpiles of copper in Shanghai warehouses climbed 7 percent last week to 104,248 tons, the highest since April 2004.

    The recent increase "is not an indication of an easing in underlying Chinese demand, and is merely a reflection of over- importing" in the second quarter, Macquarie Group Ltd. said in an e-mailed report.

    "The degree of stock increase on the SHFE over the past five months is expected to moderate in coming months," analysts led by Jim Lennon said. "There is the distinct possibility of stock declines on the SHFE, in the face of sharply falling refined imports and continued strong Chinese demand growth."

    Among other LME-traded metals, aluminum added 0.2 percent to $1,919 a ton, zinc climbed 0.7 percent to $1,925 a ton, and nickel rose 1.2 percent to $17,350 a ton. Lead slid 0.2 percent to $2,180 a ton and tin was yet to trade as of 11:27 a.m. in Shanghai.

    (Source: Bloomberg)