Copper in London may drop for a fourth day, the longest period of declines since January, on concern that China may step up its credit-tightening measures to cool asset prices.
Three-month-delivery copper on the London Metal Exchange was little changed at $9,500 a metric ton at 2:31 p.m. Singapore time, after falling as much as 0.6 percent earlier. The contract dropped to $9,443 a ton yesterday, the lowest in a week. Zinc, lead and tin gained.
“Higher prices hinge on China’s demand, which is unclear at the moment,” said Yang Zhenqiang, an analyst at First Futures Co. “We do see physical buyers emerge every time there’s a decline, so that’s keeping the market supported.”
July-delivery copper on the Comex in New York gained 0.4 percent to $4.3315 a pound. The metal for June-delivery on the Shanghai Futures Exchange dropped for a third day, declining as much as 1.8 percent to 70,880 yuan ($10,848) a ton.
China is likely to raise banks’ reserve requirement ratios in the “near future,” the China Securities Journal said in a front-page commentary today. China has increased the ratio three times this year as part of efforts to curb inflation. The government is scheduled to release March inflation and first- quarter economic growth data tomorrow.
Analysts’ Forecasts
The leaders of Brazil, Russia, India, China and South Africa, meeting in China, said rising commodities prices pose a threat to global growth, according to a draft copy of the communiqué given to Bloomberg News. Copper’s 30-day historical volatility, a measure of how much the metal fluctuates, was at 26 percent today, the highest level since April 1.
Goldman Sachs Group Inc. lowered its year-end copper forecast 11 percent on concern that weak Chinese demand and the earthquake in Japan will delay an expected reduction in exchange stockpiles. Copper may reach $9,800 a ton by the end of this year, down from a previous forecast of $11,000, analysts Joshua Crumb and Allison Nathan said in an April 12 report.
“The global copper market will show a small deficit this year, even if Chinese demand does not grow at all,” Bank of America Merrill Lynch strategist Michael Widmer wrote in a report yesterday. “Reduced copper offtake from China will, however, have a knock-on impact on 2012: if the country’s demand increases by less than 2.5 percent in 2011, there is scope for an oversupplied market next year.”
Zinc in London gained 0.8 percent to $2,440 a ton, lead climbed 0.6 percent to $2,695 a ton, nickel increased 0.2 percent to $26,300 a ton and tin advanced 1.2 percent to $32,644 a ton. Aluminum was little changed at $2,664 a ton.
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