Bloomberg News

Copper Falls for First Day in Three Amid Europe Debt Concerns

November 15, 2011

Nov. 15 (Bloomberg) -- Copper dropped for the first time in three days as rising borrowing costs in Italy fueled concerns that the Europe’s debt crisis is worsening.

Copper for delivery in three months fell as much as 0.8 percent to $7,696 a metric ton before trading at $7,730 at 4:59 p.m. Seoul time on the London Metal Exchange. The price is down 19 percent this year.

“Concerns about Europe are re-emerging,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. “The market seemed to get a boost from expectations for a new cabinet in Italy, but we now come down to earth and face reality.”

Italy’s borrowing costs surged to the highest level since 1997 at a note sale yesterday, while 10-year Spanish yields climbed 25 basis points to 6.11 percent. Spain is scheduled to auction bills maturing in 12 months and 18 months today. The Euro dropped against 10 of its 16 major counterparts.

Eastern European economic growth probably slowed in the third quarter as Europe’s debt crisis damped demand for exports, the region’s main driver for expansion, and stunted lending by banks, Bloomberg surveys of economists show.

Copper earlier rose as much as 0.4 percent to $7,791.25 on speculation that China may loosen its monetary policy to spur economic growth in the world’s biggest consumer of the metal. The March-delivery contract gained 0.2 percent to $3.5150 a pound on the Comex in New York.

China’s banks made 586.8 billion yuan ($92.5 billion) in new loans last month, exceeding September’s 470 billion yuan and all 18 estimates in a Bloomberg survey.

Lead Batteries

Lead declined the most among six industrial metals traded on the LME, dropping as much as 1.4 percent to $2,026 a ton.

China has shuttered almost 90 percent of lead-acid battery makers in a government crackdown to curb lead poisoning cases, cutting sales and weighing on lead prices, said Cao Guoqing, deputy secretary general of the China Battery Industry Association.

“We would expect this will certainly keep a lid on the price of lead going forward,” David Lennox, a resource analyst with Fat Prophets, said today by phone from Sydney.

LME aluminum lost 0.4 percent at $2,156 a ton and nickel dropped 0.4 percent to $17,736 a ton. Zinc was little changed at $1,941.25 a ton, while tin rose 0.6 percent to $21,600 a ton.

China’s 2011 refined zinc output may drop 2.1 percent to 5.1 million tons and consumption may rise 6.1 percent to 5.2 million tons, Chen Quanxun, chairman of the China Nonferrous Metals Industry Association, said at a conference in Kunming.

--With assistance from Helen Sun in Shanghai and Milda Seputyte in Vilnius. Editors: Jarrett Banks, Richard Dobson

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

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


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