Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc, and Copper Head For Weekly Decline
on Signs China, U.S. Growth is Easing
By Bloomberg News - Jul 16, 2010

Copper declined, heading for a weekly drop, on signs that economic growth is slowing in China and the U.S., the world’s two largest consumers of the metal.

Copper for three-month delivery lost 0.3 percent to $6,660 a metric ton on the London Metal Exchange at 2:38 p.m. in Shanghai, a 1.5 percent loss this week. Zinc rose 1.3 percent to $1,832 a ton, narrowing this week’s loss to 3.8 percent.

China’s economic growth eased to 10.3 percent in the second quarter and industrial production slowed more than forecast in June. The U.S. Federal Reserve trimmed its growth forecast and the country’s manufacturing contracted in June by the most in a year. Copper, used in construction and home appliances, had its first quarterly loss since 2008 in the April-to-June period on concerns that the global economic recovery was weakening.

“Equities responded poorly to the economic data, damping sentiment for metal investors, who have been struggling for a direction,” Zhang Hao, an analyst at Citic Newedge Futures Co., said from Shanghai today.

Declines in U.S. equities and the dollar are pulling metals in opposite directions and “locking the market in a narrow trading range that’s expected to stay for one or two more weeks”, Zhang said.

The Dollar Index, a six-currency gauge of the dollar’s value, was headed for a sixth weekly drop. Commodities, priced in the dollar, usually move counter to the currency.

Still, China and India’s construction industries will drive copper and zinc prices higher this year, said Thomas Findley, chief executive officer of Canadian exploration company Rio Cristal Zinc Resources Corp.

Shrinking Inventory

Copper inventories monitored by the LME have shrunk 15 percent this year. Cancelled warrants, or metal earmarked for delivery, jumped 11 percent yesterday.

“Recent declines in LME stockpiles often occurred in Asian warehouses, implying China may be increasing purchases,” Tan Wentao, an analyst at HNA Topwin Futures Co., said from Shanghai.

Copper for October delivery in Shanghai added as much as 0.7 percent to 53,260 yuan ($7,865) a ton and last traded at 53,130 yuan. Aluminum in London rose 0.2 percent to $2,019 a ton, while nickel dropped 0.4 percent to $19,320 a ton. Lead advanced 0.6 percent to $1,809 a ton and tin rose 0.8 percent to $18,080 a ton as of 3 p.m. in Shanghai.

http://www.bloomberg.com/news/2010-07-16/copper-zinc-head-for-weekly-decline-on-signs-china-u-s-growth-is-easing.html