Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc dropps, Copper Declines, Paring Fourth Monthly Advance, as the Dollar Strengthens
By Maria Kolesnikova - Oct 29, 2010 2:32 AM PT

Copper fell in London, paring a fourth monthly gain, as a stronger dollar eroded demand for industrial metals as an alternative investment.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rose as much as 0.5 percent. Still, it’s on course for a second monthly drop amid speculation that the Federal Reserve will announce further policy-loosening steps, or quantitative easing, next week. A report today may show stronger economic growth in the U.S., the second-biggest copper user.

“Markets are bracing themselves for the Fed meeting next week, which will shed light on the quantitative-easing program, and are still trading against the dollar,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Most investors will also be looking for U.S. third-quarter GDP numbers due today.”

Copper for delivery in three months fell $170, or 2 percent, to $8,170 a metric ton at 10:05 a.m. on the London Metal Exchange. The contract is up 1.9 percent this month. Copper for delivery in December slid 1.9 percent to $3.717 a pound on the Comex in New York. Tin dropped the most since June on the LME.

A stronger dollar makes metals priced in the currency more expensive in terms of other monies. A fourth monthly advance for copper would be the longest winning streak since the four months through August 2009.

ETF Introductions

“The combination of a potential strike at Collahuasi and the launch of copper exchange-traded funds is adding to what it already a bullish outlook for copper,” said Dan Major, an analyst at RBS Global Banking & Markets in London. “Despite these fundamental factors, dollar strength will likely lead to further copper-price weakness.”

Workers at Anglo American Plc and Xstrata Plc’s Collahuasi copper mine, the world’s fourth-biggest, are prepared to continue wage negotiations after rejecting a company offer, union secretary Juan Antonio Barraza said yesterday. The mine is in Chile, the largest copper-producing nation.

BlackRock Inc., the world’s biggest money manager, plans to introduce an exchange-traded product backed by copper, according to an Oct. 26 filing with the U.S. Securities and Exchange Commission. JPMorgan Chase & Co. plans a similar ETP, according to an Oct. 22 SEC filing. ETF Securities Ltd. said Oct. 11 it aimed to start ETPs backed by six industrial metals.

U.S. Economy

A report due at 1:30 p.m. London time today may show that U.S. gross domestic product expanded at a 2 percent annual pace in the third quarter, up from a 1.7 percent rate in the prior three months, according to the median estimate of 83 economists surveyed by Bloomberg News. Figures scheduled for 2:55 p.m. release may show little change in consumer confidence.

Copper may fall in London next week as the dollar strengthens and demand slows in China, the world’s biggest consumer of the metal, a Bloomberg News survey showed.

LME copper stockpiles rose 0.1 percent to 368,500 tons today, daily exchange figures showed. Copper stockpiles monitored by the Shanghai Futures Exchange fell 184 tons on the week to 106,091 tons, the bourse said today.

Orders to draw copper from LME stocks, or canceled warrants, gained 2.7 percent to 30,050 tons.

Tin for three-month delivery on the LME dropped 3.6 percent to $25,300 a ton after sliding as much as 4.6 percent, the most since June 4. Prices reached a record $27,338.50 on Oct. 14. The metal has jumped 49 percent this year, leading gains on the LME, after production was disrupted in Indonesia and the Democratic Republic of Congo.

Zinc dropped 3.6 percent to $2,405 a ton after falling as much as 4.6 percent, the most since Sept. 9. Lead declined 3.2 percent to $2,426 a ton, nickel lost 1.5 percent to $22,764 a ton and aluminum slid 1 percent to $2,322.75 a ton.

http://www.bloomberg.com/news/2010-10-29/copper-declines-paring-fourth-monthly-advance-as-the-dollar-strengthens.html