Copper Falls in London as Dollar Gains on Concern About Greece
By Anna Stablum
March 18 (Bloomberg) -- Copper fell in London as the dollar strengthened on concern that Greece will fail to secure financial assistance from the European Union.
The dollar rose against the euro for a second day, climbing as much as 0.7 percent. Gains by the U.S. currency make dollar- priced commodities more expensive for holders of other monies. Raw materials from oil to wheat declined.
“The impact that the volatility in the euro is having is substantial for all commodity markets,” Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, said by phone. “They are all moving in lock step with what is happening in Greece and the result in the euro-dollar rate.”
Copper for delivery in three months fell $54, or 0.7 percent, to $7,480 a metric ton at 9:42 a.m. on the London Metal Exchange. Copper for May delivery slid 0.7 percent to $3.394 a pound on the Comex in New York. All of the six main metals traded on the LME dropped, led by zinc.
Concern about Greece’s ability to reduce its budget deficit has caused the euro to slump 4.4 percent against the dollar in 2010. The single European currency weakened today after a Greek official was cited as saying the country had little hope of aid from a European Union summit next week and may seek help from the International Monetary Fund.
China’s Economy
“Where you have a strengthening dollar, because the euro is weakening, that is not good for base-metal prices,” Brown said.
Concern about the possibility of an overheating economy in China, the world’s biggest copper user, also contributed to the drop, according to Brown. LME copper slid to a two-week low of $7,270 a ton on March 15 on concern that interest rates might increase in the Asian nation.
“We are slightly cautious about the situation in China, with inflation being a potential problem,” Brown said. “We don’t think the Chinese authorities are in a position to support growth as strong as they would like.”
Stockpiles of copper in LME-monitored warehouses fell for a 12th day to 524,175 tons, the lowest level since Jan. 18. The streak of declines is the longest since June.
“Generally we think the outlook is a little bit better,” Brown said. Demand traditionally increases in the second quarter, particularly from China, he said.
Zinc, Lead
“We are optimistic on all the base metals,” he said. “We particularly like copper, zinc and lead.”
Zinc for three-month delivery on the LME fell 0.9 percent to $2,327 a ton. Lead dropped 0.4 percent to $2,245 a ton.
Commodities drew $3.98 billion of investment last month, almost 29 times January’s amount, favoring investments linked to indexes over exchange-traded products, Barclays Capital said. Total commodity assets under management, also bolstered by price gains, expanded to $255 billion after dropping $12 billion to $245 billion in January, it said. Inflows in January were $139 million.
Nickel fell 0.2 percent to $22,214 a ton. BHP Billiton Ltd., the world’s biggest mining company, said its Australian Kwinana refinery may not restart for two weeks after shutting down on March 15.
Aluminum for three-month delivery fell 0.2 percent to $2,290 a ton and tin dropped 0.7 percent to $17,620 a ton.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net.
Last Updated: March 18, 2010 05:56 EDT
