Home > News > Others

Copper, Zinc Drop as China Credit Cooling, Korea May Hurt Demand

Wednesday, Nov 24, 2010
点击:

Nov. 23 (Bloomberg) -- Copper, zinc and aluminum declined on concern China’s banks may soon end loans for the year, damping demand from the biggest user. An artillery exchange between North and South Korea boosted the dollar, which also weighed on metals priced in the U.S. currency.


The three-month delivery contract on the London Metal Exchange dropped 2 percent to $8,125 a metric ton at 4:40 p.m. in Singapore. The metal for March delivery on the Shanghai Futures Exchange closed 3 percent lower at 61,490 yuan ($9,249). Zinc for March delivery tumbled the 5 percent limit in Shanghai.


Copper “is facing resistance as physical demand isn’t so good in China,” Cao Yanghui, an analyst at Yong’an Futures Co., said from Hangzhou.


China’s biggest banks are close to reaching annual lending quotas and plan to stop expanding their loan books to avoid exceeding the limits, according to four people with knowledge of the matter. Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and Agricultural Bank of China Ltd. are only extending new loans as existing ones get repaid, the people said, speaking on condition of anonymity.


Stocks and U.S. futures dropped and the dollar gained against 15 of its 16 major counterparts after South Korea’s Joint Chiefs of Staff said in a statement North Korea fired “several” artillery shells into the South, and South Korea returned fire.


Korea Exchange


South Korea scrambled fighter jets and returned fire after North Korea lobbed dozens of shells into its waters and an island, injuring 14 soldiers, according to the government and YTN reports. The dollar index increased 0.3 percent to 78.951.


Currently, the Korean exchange “only affects the dollar, as a safer investment choice among currencies, which in turn weighs on copper,” said Ying Haoliang, an analyst at Orient Securities Futures Co. “But if it escalates, it might have a direct impact on actual supply and demand.”


With little economic data expected this week, base metals may continue to track the dollar, while the Thanksgiving holiday in the U.S. may deter the market from taking any aggressive action, Leon Westgate, an analyst at Standard Bank Plc in London, said in a research note e-mailed today.


“A general feeling of uncertainty and a lack of momentum still dominates, with metals likely to continue reacting to headlines and other exogenous factors this week, rather than forging a path of their own,” he said.


Dollar Boost


The dollar was also boosted after Irish Prime Minister Brian Cowen said he would seek national elections early next year once his government passes its 2011 budget. The announcement raised concern it would hinder the nation’s aid talks with the European Union and the International Monetary Fund.


Moody’s Investors Service said it may lower Ireland’s credit rating by more than previously anticipated. A “multi- notch” downgrade to the country’s Aa2 rating was “most likely,” it said.


Copper traded on Changjiang, Shanghai’s biggest nonferrous metals market, was quoted at 61,700 yuan to 61,800 yuan today, a discount of 100 yuan to 200 yuan to the front-month futures contract on the Shanghai Futures Exchange.


“Europe’s debt crisis helped the dollar and in turn weighed on copper,” Cao said. “Trading firms said demand from end consumers is not good, because winter is approaching.”


Demand for metals typically increases in spring and autumn, and weakens in summer and winter as extreme weather conditions and holidays may force some plants to suspend operations.


Chinese imports will likely remain low through to the end of the year as the domestic market continues to trade at a large physical discount and exchange warehouse stocks expand to levels not seen since June, Barclays Capital said in a report yesterday. The implied destocking along the supply chain indicated imports may pick up in early 2011, it said.


Aluminum in London fell 1.4 percent to $2,256.5 a ton, zinc declined 2.5 percent to $2,085 a ton and lead lost 2.7 percent to $2,189.75 a ton. Nickel slid 1.9 percent to $21,190 a ton, and tin dropped 1.2 percent to $24,000 a ton.


--Helen Sun. Editors: Richard Dobson, Matthew Oakley.

Recommended exhibitions

16TH ARAB INTERNATIONAL ALUMINIUM CONFERENCE
  ARABAL, which is being organized and hosted by Qatalum, is the premier trade event for the Middle East's aluminium i......
Aluminium 2012
  ALUMINIUM is the leading B2B platform in the world for the aluminium industry and its main applications. This is whe......
The 4th edition of Zak Aluminum Extrusions Expo
 Date

  14th - 16th December 2012

  Venue

  Pragati Maidan,

  New Delhi,India.

  Exhibition Timings

 ......
ALUMINIUM DUBAI 2011
Name:ALUMINIUM DUBAI 2011
Time:2011-5-9 to 2011-5-11
Place:Dubai International Convention & Exhibition Centre, Dubai, UAE......