Farallon Resources Ltd. (fka FRLIF)

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Zink little changed, Copper Heads for Weekly Drop on Concern About U.S., China Demand Outlook
By Anna Stablum - Sep 10, 2010 5:39 AM PT

Copper headed for a weekly drop in New York and London on concern about the outlook for demand in the U.S. and China, the world’s two biggest consumers.

The U.S. economy showed “widespread signs” of slowing, the Federal Reserve said Sept. 8. China advanced the release of August economic figures to tomorrow, stoking speculation that the country’s central bank may be preparing to raise a benchmark interest rate. Prices also fell as orders to draw copper from inventories posted the biggest weekly slide since May.

“The world economy is slowly getting better, but I’d be surprised if the U.S. is going to lead the way,” said Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London.

Copper for delivery in December declined 0.85 cent, or 0.2 percent, to $3.435 a pound at 8:24 a.m. on the Comex in New York. The most-active contract is down 1.9 percent this week after three consecutive gains. Copper for delivery in three months fell 0.2 percent to $7,540 a metric ton on the London Metal Exchange.

Imports of copper and products into China rose 11 percent to 379,527 tons in August from July, customs figures showed. That was the second straight monthly increase. Shipments also gained from a year earlier, according to Bloomberg calculations. The country is the biggest copper user.

Growth in China

“Essentially it is a representation that Chinese growth is only slowing modestly,” Brown said. Still, he predicted “less buoyant” figures for September, saying a narrowed gap between London and Shanghai copper prices reduced profit from selling metal in Asia.

Copper may decline next week on speculation the economic recovery is slowing in the U.S., according to a survey. Nine of 17 analysts, investors and traders surveyed by Bloomberg, or 53 percent, said the metal will drop next week. LME copper yesterday fell as low as $7,460 a ton, the lowest price since Sept. 1.

Orders to draw copper from LME inventories, or canceled warrants, declined for a seventh day, sliding 8.2 percent to 20,800 tons. That was the lowest level since Aug. 13. Canceled warrants plunged 25 percent this week, the most since the week ended May 7.

LME copper stockpiles dropped for a sixth day to 391,400 tons, the lowest level since Nov. 9, daily exchange figures show. Inventories slid for a 29th consecutive week.

Shanghai Inventories

Copper stockpiles in Shanghai declined for a second week to a seven-month low, according to data provided by the Shanghai Futures Exchange. Inventories declined 7.5 percent to 98,025 tons.

Commerce Department figures due at 10 a.m. Washington time today may show that inventories at U.S. wholesalers climbed 0.4 percent in July after a 0.1 percent increase the previous month, according to the median estimate of economists surveyed by Bloomberg News.

Nickel for three-month delivery on the LME climbed 0.5 percent to $22,863 a ton. Inventories rose for the first time in six days to 119,160 tons, reducing this year’s decline to 25 percent.

October-delivery metal on Sept. 8 closed at a $20 premium to the November contract, a so-called backwardation that was at the same level as of yesterday’s close. The contracts settled at the same price on Sept. 7.

Cash nickel’s discount versus three-month metal contracted to $6 yesterday, the narrowest level since Sept. 2, 2009. Cash metal was at a $55 discount a week ago.

One party held between 30 percent and 39 percent of available nickel stockpiles as of Sept. 8, according to the latest LME data.

Tin gained 1.2 percent to the day’s high of $21,950 a ton, the highest intraday price since Aug. 1, 2008. Aluminum rose 0.4 percent to $2,113 a ton, zinc was little changed at $2,152 a ton and lead fell 0.3 percent to $2,195 a ton.

http://www.bloomberg.com/news/2010-09-10/copper-heads-for-weekly-drop-on-concern-about-u-s-china-demand-outlook.html