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Zinc drops 5.3% Copper Drops From 14-Month High as Equities Fall, Dollar Gains

By Jae Hur

Nov. 27 (Bloomberg) -- Copper tumbled in Shanghai and London, extending a retreat from the highest level in more than 14 months, on speculation rising stockpiles, tumbling equities and a rebound in the dollar may signal slower demand.

Asian equities fell, tracking European stocks that plunged the most in seven months yesterday on concern Dubai’s proposal to delay debt payments may trigger the biggest sovereign default since 2001. Copper inventories in warehouses monitored by the London Metal Exchange rose to the highest level since April 23 yesterday. The Dollar Index of the greenback against six currencies rose from a 15-month low.

“A rebound in the dollar sent copper prices lower,” said Cai Luoyi, an analyst at China International Futures (Shanghai) Co. “There’s a consensus in the market that over the long run the dollar will trend lower, and copper prices will continue to rise on expectations of a weaker dollar, inflation and rising demand.”

February-delivery copper on the Shanghai Futures Exchange lost as much as 3.5 percent to 53,390 yuan ($7,819) a ton and closed at 53,700 yuan. The price touched 55,900 yuan yesterday, the highest intraday level since Sept. 12, 2008.

Copper for delivery in three months on the London Metal Exchange fell 2.6 percent to $6,645 a ton at 4:53 p.m. Tokyo time, reversing an earlier 0.6 percent gain. The metal lost 2.4 percent yesterday after touching $7,060 a ton, the highest since Sept. 24 last year.

‘Dollar Index’

The Dollar Index rallied as much as 1 percent, reducing the appeal of commodities as an alternative investment, and was up 0.9 percent at 75.524 at 4:47 p.m. in Tokyo. Crude oil was down 5.1 percent at $73.98 a barrel.

Among other LME-traded metals, aluminum fell 1.8 percent to $1,972 a ton, lead plunged 7.7 percent to $2,161 a ton, and nickel was 4.4 percent down at $15,850 a ton. Zinc dropped 5.3 percent to $2,136 a ton and tin lost 1.7 percent to $14,725 a ton as of 4:57 p.m. in Tokyo.

China, the world’s largest aluminum consumer, may impose a tax on the metal after imports surged and pressured domestic producers, the National Development and Reform Commission said.

The rising imports led to “lots of pressure” on the domestic market, Yu Dongming, a director at the industry coordination department of China’s top economic planner said at a conference in Kunming today. The country doesn’t have an import tax on the metal currently.

Chinese purchases of aluminum were 13 times higher this year than in 2008 as traders and manufacturers bought the metal in anticipation of demand from the government’s $586 billion stimulus spending. The country’s imports of aluminum jumped to 1.4 million tons in the first ten months.

In Japan, shipments of aluminum rolled products dropped at the slowest pace in a year in October as an economic recovery improved demand for the metal from carmakers and machinery companies. Supplies to the domestic and export markets fell 14 percent to 165,480 tons from 193,157 tons a year earlier, the Japan Aluminium Association said today.
By Jae Hur

Nov. 27 (Bloomberg) -- Copper tumbled in Shanghai and London, extending a retreat from the highest level in more than 14 months, on speculation rising stockpiles, tumbling equities and a rebound in the dollar may signal slower demand.

Asian equities fell, tracking European stocks that plunged the most in seven months yesterday on concern Dubai’s proposal to delay debt payments may trigger the biggest sovereign default since 2001. Copper inventories in warehouses monitored by the London Metal Exchange rose to the highest level since April 23 yesterday. The Dollar Index of the greenback against six currencies rose from a 15-month low.

“A rebound in the dollar sent copper prices lower,” said Cai Luoyi, an analyst at China International Futures (Shanghai) Co. “There’s a consensus in the market that over the long run the dollar will trend lower, and copper prices will continue to rise on expectations of a weaker dollar, inflation and rising demand.”

February-delivery copper on the Shanghai Futures Exchange lost as much as 3.5 percent to 53,390 yuan ($7,819) a ton and closed at 53,700 yuan. The price touched 55,900 yuan yesterday, the highest intraday level since Sept. 12, 2008.

Copper for delivery in three months on the London Metal Exchange fell 2.6 percent to $6,645 a ton at 4:53 p.m. Tokyo time, reversing an earlier 0.6 percent gain. The metal lost 2.4 percent yesterday after touching $7,060 a ton, the highest since Sept. 24 last year.

‘Dollar Index’

The Dollar Index rallied as much as 1 percent, reducing the appeal of commodities as an alternative investment, and was up 0.9 percent at 75.524 at 4:47 p.m. in Tokyo. Crude oil was down 5.1 percent at $73.98 a barrel.

Among other LME-traded metals, aluminum fell 1.8 percent to $1,972 a ton, lead plunged 7.7 percent to $2,161 a ton, and nickel was 4.4 percent down at $15,850 a ton. Zinc dropped 5.3 percent to $2,136 a ton and tin lost 1.7 percent to $14,725 a ton as of 4:57 p.m. in Tokyo.

China, the world’s largest aluminum consumer, may impose a tax on the metal after imports surged and pressured domestic producers, the National Development and Reform Commission said.

The rising imports led to “lots of pressure” on the domestic market, Yu Dongming, a director at the industry coordination department of China’s top economic planner said at a conference in Kunming today. The country doesn’t have an import tax on the metal currently.

Chinese purchases of aluminum were 13 times higher this year than in 2008 as traders and manufacturers bought the metal in anticipation of demand from the government’s $586 billion stimulus spending. The country’s imports of aluminum jumped to 1.4 million tons in the first ten months.

In Japan, shipments of aluminum rolled products dropped at the slowest pace in a year in October as an economic recovery improved demand for the metal from carmakers and machinery companies. Supplies to the domestic and export markets fell 14 percent to 165,480 tons from 193,157 tons a year earlier, the Japan Aluminium Association said today.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acx5i1M1mwpo