Bloomberg News

Copper Drops After Rebound on Concern Debt Crisis to Damp Demand

September 28, 2011

Sept. 28 (Bloomberg) -- Copper declined in London after rallying the most since February 2010 yesterday, as industrial metals fell on concerns that European leaders’ divided opinions to tame a sovereign debt crisis may damp demand for commodities.

Copper for delivery in three months on the London Metal Exchange fell as much as 4.5 percent to $7,250 a metric ton, and traded at $7,520 by 3:57 p.m. Shanghai time after jumping 4.5 percent yesterday to snap seven days of declines. The contract has retreated 23 percent this quarter, poised for the biggest loss since the period ending December 2008.

“Investors are still worried about the debt crisis in Europe, and the uncertainties over Greece have kept market participants cautious,” Peng Qiang, an analyst at Cofco Futures Co., said by phone from Beijing.

As many as seven of the 17 nations using the euro believe private creditors should absorb bigger losses, a division that may threaten an agreement reached with investors in July, The Financial Times reported today, citing unnamed senior European officials.

December-delivery metal on the Comex in New York dropped 2.3 percent to $3.3620 a pound. The December-delivery contract on the Shanghai Futures Exchange closed 0.2 percent higher at 55,170 yuan ($8,631) a ton.

Citigroup Inc. lowered its zero to three-month copper forecast to $7,000 a ton from $8,500 a ton due to “financial uncertainty.” The metal may have to drop to $6,400, based on the cost of production and a “buy versus build analysis,” Citigroup analyst Heath Jansen wrote in a report dated yesterday.

Copper prices could dip to as low as $6,000 before the end of this year, given a weak growth outlook, Edward Meir, a senior commodity analyst at MF Global Holdings Ltd., said in a report yesterday. For 2012, the price range may be between $5,800 and $9,300, with weakness concentrated in the first half of the year, according to the report.

Aluminum climbed 0.6 percent to $2,259 a ton. Zinc declined 1.4 percent to $1,944 a ton, lead fell 1 percent to $2,005 a ton. Nickel dropped 0.3 percent to $18,900 a ton, and tin was little changed at $21,800.

--Helen Sun, with assistance from Sungwoo Park in Seoul. Editor: Richard Dobson

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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