Copper in London Declines for Second Day on Concern Demand Growth May Slow

Copper in London declined for a second day on concern that demand growth may slow as China, the world’s largest user, takes more steps to cool its economy and Europe’s debt crisis persists. Zinc and lead also dropped.

Three-month copper on the London Metal Exchange fell as much as 0.6 percent to $9,571 a metric ton and traded at $9,578 at 10:03 a.m. in Singapore. China should speed up interest-rate increases to eliminate negative real rates, 21st Century Business Herald said, citing central bank adviser Xia Bin, referring to borrowing costs that are less than inflation.

“Uncertainties about China’s demand this year are taking some of the optimism about a shortage this year out of the market,” said Li Yongmin, senior analyst at Green Futures Brokerage Co. The refined-copper market may have a 600,000-ton deficit in 2011, according to JPMorgan Securities Ltd.

April-delivery metal on the Shanghai Futures Exchange dropped as much as 0.8 percent to 71,020 yuan （$10,777）, while futures in New York were little changed at $4.39 a pound, after gaining as much as 1.8 percent earlier.

China’s central bank on Jan. 14 ordered lenders to hold more deposits as reserves for the fourth time in two months, adding to last year’s policy-tightening measures by the government that included two interest rate increases.

The country’s lending target for this year may decline 10 percent from 2010, the China Securities Journal reported today, citing an unidentified person. China’s stocks fell, extending the benchmark index’s biggest loss in two months.

‘Being Hurt’

“Metals are being hurt by the general sentiment in the other markets, including stocks and the dollar,” Green Futures’s Li said from Henan.

The dollar rose for a second day against a six-currency basket including the euro on concern that an agreement among European finance ministers will fail to contain the region’s debt crisis, weighing on dollar-denominated commodities.

Expectations for supply to lag behind demand this year helped to drive copper to a record $9,754 a metric ton on Jan. 4. The metal, used in pipes and wires, advanced 30 percent in 2010 after more than doubling the year before that.

Anglo American Plc and Xstrata Plc’s Collahuasi venture in Chile said yesterday that it signed an accord with the port of Arica “recently” after a port accident forced the rerouting of shipments, easing concerns about disruptions in supplies from the world’s largest copper-producing country.

Zinc in London fell 1.4 percent to $2,420 a ton and lead lost 0.4 percent to $2,630 a ton. Aluminum rose 0.4 percent to $2,445 a ton, while nickel and tin hadn’t traded.