BL: Copper, Aluminum, Nickel Drop on Europe Crisis, China Moves to Cool Demand
Updated 17 minutes ago
Copper declined and nickel slumped as signs that Europe’s debt crisis may spread and China may step up measures to avert asset bubbles drove equities lower, renewing speculation economic growth may slow.
Three-month delivery copper on the London Metal Exchange dropped for the first time in four days, losing 1.7 percent to $6,790 a metric ton at 1:10 p.m. Shanghai time. Aluminum also fell as the MSCI Asia Pacific Index of stocks slumped to its lowest level in 10 months.
The euro dropped against 13 of its 16 major counterparts as the International Monetary Fund urged Spain to do more to overhaul its ailing banks, spurring concerns that financial institutions in the euro area face further losses. The Dollar Index advanced for a second day, reducing the appeal of commodities priced in the currency.
“Sentiment remains lousy because of the macro environment in China and Europe,” Lai Qiwen, an analyst at Guantong Futures Co., said from Beijing. “Any decline from here would be panic stricken, whereas any rebound would be cautious.”
The Reuters/Jefferies CRB Index of 19 commodities has declined the past four weeks on speculation that European efforts to curb government debt will slow economic growth and that China may step up measures to reduce asset bubbles.
Shanghai will introduce a property tax policy on a trial basis next month, the Economic Observer newspaper reported, citing an unidentified person. A more detailed policy may be announced at a later date, it said.
Growth Curbs
China has already raised minimum mortgage rates, restricted pre-sales by developers and tightened controls on purchases of second and third properties in an effort to cool growth.
Copper demand from consumers “wasn’t as good as expected in the production high season” partly because of China’s property curbs, Lai said.
Still, copper demand in China may gain as much as 12 percent this year and prices won’t fall much further, according to Wanxiang Resources Co.’s analyst Sheng Weimin. Demand, including refined and scrap copper, may climb to 8.96 million metric tons, said Sheng today.
Copper for August delivery in Shanghai retreated as much as 1.6 percent to 54,350 yuan ($7,959) a ton and last traded at 54,810 yuan a ton.
Aluminum in London lost 1.5 percent to $2,052 a ton, nickel slumped 2.4 percent to $21,660 and lead dropped 1.6 percent to $1,800 a ton. Zinc declined 0.8 percent to $1,914 and tin eased 1.4 percent to $17,500 a ton.
--Li Xiaowei. With reporting by Glenys Sim in Singapore. Editors: Richard Dobson, Matthew Oakley.
To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net
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