Farallon Resources Ltd. (fka FRLIF)

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Zinc slides, Copper Drops in New York as Chinese Imports of Metal Fall for Third Month
By Anna Stablum - Jul 12, 2010

Copper fell in New York and London as imports of metal into China dropped for a third month, stoking concern that demand may wane.

Shipments of copper and copper products into China declined to 328,231 metric tons in June, the customs bureau said July 10. The country is the world’s biggest copper consumer. Prices also retreated today as the dollar strengthened, lifting the U.S. Dollar Index, a six-currency gauge of the greenback’s strength, as much as 0.6 percent.

“Copper imports were certainly weaker than I’d expected,” Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, said by phone. “For the last two months, China has been working off inventory.”

Futures for September delivery slid 5 cents, or 1.6 percent, to $3.0035 a pound at 8:27 a.m. on the Comex in New York. Copper for delivery in three months fell 2.1 percent to $6,620 a ton on the London Metal Exchange. All of the six main metals traded on the LME dropped.

A stronger dollar makes metals priced in the currency more expensive in terms of other monies. The dollar index has gained 8.2 percent this year, contributing to LME copper’s 10 percent slide.

Copper also has dropped on concern that demand may wane in China as the government moves to restrain the nation’s surging economy. Figures due July 15 probably will show that Chinese gross domestic product expanded 10.5 percent in the second quarter, down from 11.9 percent in the prior period, according to economists surveyed by Bloomberg News.

Imports of Scrap

“We expect the second quarter to be substantially slower than the first quarter,” said Brown of Natixis. “If China is slowing to a more sustainable pace of growth as stimuli wear off, that isn’t a problem. If it is slowing more aggressively than that, it may become a problem.”

Chinese imports of copper scrap rose to 350,000 tons in June, according to the report. The gain “surprised market participants, as stricter customs rules were expected to undermine imports,” Marc Elliott, an analyst at Fairfax IS in London, said in a report.

Copper stockpiles tracked by the LME shrank for a 17th day to 435,250 tons, the lowest level since Nov. 27, according to a daily LME report. They’re down 13 percent this year and headed for the first annual drop since 2004. Bookings to remove metal from LME warehouses fell for a third day, down 7.5 percent to 27,350 tons.

Copper futures outstanding, or market open interest, rose to 443,072 contracts as of July 8, the highest level since March 5, 2009, LME data showed. Aluminum open interest rose to the highest since August last year, the figures showed.

Aluminum for three-month delivery on the LME fell 1.2 percent to $1,979.25 a ton. Chinese imports of the lightweight metal and aluminum products slid to about 74,580 tons last month, according to the report.

Lead declined 1.7 percent to $1,814.50 a ton and nickel dropped 1.4 percent to $19,232 a ton. Zinc slid 2.4 percent to $1,858 a ton and tin declined 0.3 percent to $17,590 a ton.

http://www.bloomberg.com/news/2010-07-12/copper-drops-in-london-as-reduced-imports-in-china-may-signal-slower-usage.html