Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc dips, Copper May Decline on Concern About Potential Real-Estate Curbs in China
By Anna Stablum - Sep 15, 2010 4:58 AM PT

Copper may fall in New York on concern that the government in China, the world’s largest consumer of the metal, might take more steps to curb the real- estate market, one of the main sources of demand.

The Shanghai Composite Index of Chinese equities declined the most in almost a week. Property stocks slid after the People’s Daily cited an official as saying developers face increasing cash-flow pressure. Copper also dropped as investors awaited figures that may show a slowdown in U.S. industrial production.

“There are scattered reports that the government may introduce new measures to cool the property market” in China, said Daniel Brebner, an analyst at Deutsche Bank AG in London. A quarter of all copper is consumed in construction, according to the Copper Development Association.

Copper for delivery in December fell 0.4 cent, or 0.1 percent, to $3.4645 a pound at 7:49 a.m. on the Comex in New York, rebounding from a slide of as much as 0.7 percent. Copper for delivery in three months declined 0.5 percent to $7,614 a metric ton on the London Metal Exchange.

Prices also retreated after a person with knowledge of the matter said China’s banking regulator may require the nation’s “systemically important” lenders to raise capital-adequacy ratios as high as 15 percent by 2012.

Empire State

U.S. industrial production increased 0.2 percent last month after rising 1 percent in July, according to the median estimate of 78 economists surveyed by Bloomberg News. The Federal Reserve figures are scheduled for release at 9:15 a.m. in Washington.

A report due 45 minutes earlier from the New York Federal Reserve Bank probably will show that the so-called Empire State manufacturing index increased to 8 this month from 7.1 in August, according to the median forecast in a Bloomberg survey.

“We expect that even if data disappoints, the prospect for the Federal Reserve’s possible intervention or more quantitative easing could keep metal prices supported,” Brebner said. “The contradictory economic data that has been released over the past month is making the assessment of physical demand much more difficult than usual.”

Figures published in recent weeks showed weaker-than- estimated U.S. housing starts and durable-goods orders in July, as well as an unexpected slump in the Philadelphia Fed’s factory index. At the same time, consumer confidence was stronger than economists estimated and private payrolls climbed more than expected in August.

Stronger Dollar

Prices also dropped today as the dollar strengthened, making metals prices in the currency more expensive in terms of other monies. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, climbed as much as 0.8 percent.

LME copper stockpiles fell 0.3 percent to 389,500 tons, according to daily exchange figures. They have dropped 22 percent in 2010, heading for the first annual contraction in six years.

Orders to draw copper from LME inventories, or canceled warrants, jumped the most in more than three months. They rose 21 percent, the most since June 8, to 27,675 tons.

Nickel for three-month delivery on the LME slid 0.6 percent to $23,200 a ton. The contract yesterday reached $23,355, the highest intraday price since May 10. LME stocks, down 24 percent this year, rose 0.7 percent today to 119,856 tons.

The nickel market moved into a so-called backwardation yesterday as cash metal traded at a premium of $2 a ton to the three-month contract, compared with discounts of $6 on Sept. 13 and $39 a week ago. A backwardation often indicates a scarcity of a commodity for nearer-term delivery.

Tin gained 1 percent to $22,875 a ton after touching $22,990, the highest intraday price since July 24, 2008. Aluminum fell 0.3 percent to $2,153.50 a ton, lead dropped 0.4 percent to $2,234 a ton and zinc slid 1.3 percent to $2,147 a ton.

http://www.bloomberg.com/news/2010-09-15/copper-drops-in-london-on-concern-about-potential-china-real-estate-curbs.html