Bloomberg News

Copper Drops on Rising China Stockpiles; Europe Crisis Concern

December 12, 2011

Dec. 12 (Bloomberg) -- Copper declined on speculation that a slowdown in China’s industrial output will increase stockpiles in the biggest consumer and on concern that Europe’s debt crisis will persist even after leaders agreed to a fiscal accord.

The three-month contract on the London Metal Exchange fell as much as 2 percent to $7,657 a metric ton and traded at $7,658 by 4:51 p.m. Tokyo time. The metal lost 1 percent last week. The March-delivery contract dropped 2.4 percent to $3.471 per pound on the Comex in New York.

China’s industrial production grew 12.4 percent in November from a year earlier, the slowest pace since August 2009. Copper stockpiles jumped 26 percent last week to 72,712 tons from a 28- month low of 57,655 tons a week earlier, data from the Shanghai Futures Exchange showed Dec. 9.

“Copper was undermined by stockpiles in Shanghai that increased sharply last week,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. Prices will also be influenced by developments in Europe, he said.

German Finance Minister Wolfgang Schaeuble said euro-area policy makers will now focus on implementing the 200 billion euros ($267 billion) pact to strengthen budget rules as quickly as possible. The euro fell 0.6 percent against the dollar before a German report tomorrow that economists say will show investor confidence in the region’s largest economy slid to a three-year low.

The decline in copper prices may be capped by a strike at Freeport-McMoRan Copper & Gold Inc.’s Grasberg mine in Indonesia, Hwang said.

Grasberg Strike

Workers at Freeport-McMoRan’s Grasberg mine will extend their strike for a fourth month until Jan. 15, a union official said Dec. 10. The workers informed the Papua province manpower authorities and the company’s management about their decision on Dec. 5, according to PT Freeport Indonesia’s labor union spokesman Juli Parorrongan.

Copper for February delivery on the Shanghai exchange retreated 0.5 percent to close at 56,760 yuan ($8,923) a ton. Copper imports by China rose to the highest level in 20 months in November. Inbound shipments of the metal, copper alloy and products gained 18 percent to 452,022 tons from 383,507 tons in October, according to Bloomberg calculations based on data posted on the website of the General Administration of Customs.

Aluminum lost 1 percent to $2,044.75 per ton in London and zinc fell 1.4 percent to $1,974.75 per ton. Nickel dropped 2 percent to $18,225 per ton and lead declined 2.1 percent to $2,120 per ton, while tin fell 2.7 percent to $19,710 a ton.

--Editors: Thomas Kutty Abraham, James Poole

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

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


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