Bloomberg News

Copper Pares Biggest Monthly Gain Since December as Metals Drop

October 31, 2011

Oct. 31 (Bloomberg) -- Copper declined, trimming the biggest monthly advance since December and leading a fall in industrial metals, after Chinese Premier Wen Jiabao said the government will maintain property curbs and the dollar jumped.

Copper for three-month delivery on the London Metal Exchange dropped as much as 3.7 percent to $7,873.25 a metric ton and traded at $7,960.25 by 3:53 p.m. Shanghai time. The contract has gained 13 percent in October, the first increase in three months. January-delivery copper closed 1.7 percent lower at 58,230 yuan ($9,164) a ton on the Shanghai Futures Exchange.

“After a strong rally last week, copper is due for a correction,” said Lian Zheng, an analyst at Xinhu Futures Co. “U.S. and China data, as well as the progress in Europe, will provide cues regarding how deep the correction will be.”

China will “firmly” maintain its property curbs and local authorities should continue to strictly implement the central government’s real-estate policies in the coming months to let people see the results, according to a statement on Oct. 29 following a State Council meeting chaired by Prime Minister Wen.

The metal may move back in range toward $7,660 a ton, where it’s likely to form an interim base, said Barclays Capital in a technical analysis report today.

The Dollar Index, which tracks the U.S. currency against those of six trading partners, jumped as much as 1.7 percent today, making raw materials priced in the currency expensive in terms of other monies. The dollar strengthened as the yen dropped by the most in three years after Japan stepped into foreign-exchange markets to weaken the currency.

Net-Short Positions

The metal for delivery in December declined 2.7 percent to $3.605 a pound on the Comex in New York. Managed-money funds held net-short positions, or wagers on lower prices, of 5,023 futures and options as of Oct. 25, versus 8,294 a week ago, the U.S. Commodity Futures Trading Commission said on Oct. 28.

A magnitude 6.9 earthquake struck off the west coast of Peru on Oct. 28. Southern Copper Corp., Peru’s largest producer of the metal, didn’t sustain any damage at its mines or smelter in the southern region, a company spokesman said.

Striking workers at Freeport-McMoRan Copper & Gold Inc.’s Grasberg mine in Indonesia have called for suspending talks with the management for a week, Virgo Solossa, head of organization affairs at PT Freeport Indonesia’s labor union, said on Oct. 30.

Copper is “now less sensitive to positive news, such as strikes and earthquakes,” said Lian of Xinhu Futures.

Aluminum in London dropped 0.8 percent to $2,225 a ton, zinc declined 2.4 percent to $1,937 per ton, and lead retreated 3.6 percent to $2,014 a ton. Nickel lost 1.3 percent to $19,450 a ton and tin fell 0.5 percent to $22,000 per ton.

Fifteen tin producers in Indonesia, the world’s largest shipper, agreed to extend a self-imposed ban on exports until the end of the year to help boost prices, Johan Murod, director at PT Bangka Belitung Timah Sejahtera, a group of six smelters, said on Oct. 28.

--Helen Sun. Editors: Ovais Subhani, 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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