Copper prices fell, heading for the first two-day slide since September, on concern demand may weaken as China, the world’s largest consumer, moves to cool inflation.
China’s largest banks are near reaching annual lending quotas and plan to stop expanding loan books, according to four people with knowledge of the matter. The country’s benchmark money-market rate rose on speculation that borrowing costs will climb. Copper also dropped as the dollar gained, reducing the appeal of commodities as alternative investments.
“One factor has been the firmer dollar,” said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Chinese tightening concerns” also weighed on prices, he said.
Copper futures for March delivery dropped 4.2 cents, or 1.1 percent, to $3.72 a pound at 10:10 a.m. on the Comex in New York. The price lost 2.1 percent yesterday.
The Chinese government in the past month stepped up a campaign to limit credit expansion after inflation quickened and property prices surged. The country’s copper imports slid to a one-year low last month, government figures showed yesterday.
“The impact of policy tightening, and the sale of commodities from strategic state stockpiles could potentially have a more significant impact on underlying commodity markets,” Nick Moore and Daniel Major, analysts at RBS Global Banking & Markets in London, said of China in a report today.
Prices may be “stable or higher” by the end of the year, after “bottoming out” at $3.50, O’Neill of Logic Advisors said.
Before today, the metal climbed 12 percent in 2010, reaching a 30-month high of $4.0875 on Nov. 11, as global inventories dropped and the dollar slumped.
On the London Metal Exchange, copper for delivery in three months declined $122, or 1.5 percent, to $8,168 a metric ton （$3.70 a pound）. Zinc, lead, aluminum and tin also dropped. Nickel was little changed.
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