Copper, Zinc, Lead Drop as World Bank Expects Chinese Expansion to Slow

Copper declined for the first time in three days in London, as expectations of slower growth in China, the largest consumer, damped the demand outlook. Zinc and nickel fell.

The metal for three-month delivery slid as much as 0.5 percent to $9,637.50 a metric ton on the London Metal Exchange, and traded at $9,657 by 11:55 a.m. Singapore time. Zinc lost 1.3 percent to $2,448 a ton.

China’s economy will grow 8.7 percent in 2011, down from 10 percent last year, “due in part to the unwinding of fiscal stimulus, restrictions placed on overheating sectors,” such as housing, and tighter monetary policy to help reduce price increases, the World Bank said yesterday. The Washington-based lender forecast the economy would expand 8.4 percent in 2012.

“We expect China’s copper consumption to increase more slowly this year as the economy decelerates,”Qu Yi, an analyst at CRU International Ltd., said by phone from Beijing. The London-based metals researcher estimated the country’s actual usage of the metal advanced 10.5 percent in 2010.

In Australia, employers added 2,300 workers in December from the previous month, the statistics bureau said in Sydney today. That is less than a tenth of the median forecast for a 25,000 increase in a Bloomberg News survey of 17 economists.

“With little in the way of momentum at the moment, and with China seemingly happy to sit on the sidelines, the metals are struggling to hang onto their gains,” Leon Westgate, an analyst at Standard Bank Plc, said in a report yesterday.

Discount in Shanghai

Copper for immediate delivery in Shanghai, China’s metals trading hub, was quoted at a 100 yuan to 200 yuan discount today to the front-month futures contract on the Shanghai Futures Exchange. Copper for April delivery in Shanghai rose for a fourth day, gaining 0.4 percent to 71,660 yuan （$10,866） a ton.

The recent rally is “not fully supported” in the near term as demand from the power industry in China may fall short of expectations, Na Liu, China strategy adviser to Scotia Capital, said yesterday.

China State Grid Corp., the nation’s largest operator of electricity networks, is planning an 11 percent increase in fixed-asset investment this year, the Beijing-based company said in a Jan. 10 statement. That is less than the 45 percent increase the market had been expecting, Liu said in an e-mail to Bloomberg News.

Aluminum fell 0.3 percent to $2,497 a ton in London, and lead was little changed at $2,660 a ton. Nickel lost 0.3 percent to $25,715 a ton and tin gained 0.2 percent at $27,095 a ton.

Nickel supply will outpace demand this year as new projects start and demand growth in China slows following the government’s tighter monetary policies, said Sumitomo Metal Mining Co., Japan’s top producer.

--Helen Sun. Editors: Richard Dobson, Jake Lloyd-Smith.