Copper Has Biggest Weekly Drop in Three Months as China's Demand May Wane

Copper fell in London, capping the biggest weekly loss in three months, on mounting concern that demand will slow in China, the world’s largest metals user.

China ordered banks to set aside larger reserves for the second time in two weeks, draining cash from the financial system to limit inflation. The requirement will increase 50 basis points starting Nov. 29, the central bank said on its website today.

“China needs to implement further measures to cool down the economy,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. Slower growth will limit demand for industrial metals at least in the short-term, he said.

Copper for delivery in three months declined $21, or 0.2 percent, to settle at $8,404 a metric ton ($3.82 a pound) on the London Metal Exchange at 6:11 p.m. local time. The price lost 2.4 percent this week, the most since the week ended Aug. 13.

On the Comex, copper futures for delivery in March were little changed, adding 0.4 cent to $3.8425 a pound in New York.

China’s economy grew 9.6 percent in the third quarter, the most among major economies, and the nation’s inflation rate is accelerating at the fastest pace in two years. The expansion helped fuel a 15 percent rally this year in copper prices in New York. Last week, futures touched a 30-month high and the metal climbed to a record on the LME.

‘Quicker Corrections’

“With each successive round of Chinese tightening, corrections could come our way more quickly and will exhibit much greater staying power,” Edward Meir, an analyst at MF Global Holdings Ltd. in Darien, Connecticut, said today in a report.

Copper stockpiles monitored by the Shanghai Futures Exchange have gained 45 percent since the end of September to the highest level in five months.

Striking workers at Anglo American Plc and Xstrata Plc’s Collahuasi mining unit are accepting a wage proposal, company spokeswoman Bernardita Fernandez said in an e-mailed statement today. The walkout at Collahuasi, the world’s fourth-biggest mine, entered its 14th day yesterday.

An end to the wage dispute “would take the risk premium out of copper,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.

Also on the LME, aluminum, zinc, lead, and tin fell. Nickel was unchanged.

To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net; Yi Tian in New York at Ytian8@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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