Copper may fall in London, rounding out the first weekly drop in six weeks, as the dollar strengthens amid speculation Group of 20 officials will agree to refrain from weakening currencies.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rose as much as 0.4 percent, on course for the first weekly gain in six weeks. G-20 finance ministers and central bankers began talks in South Korea today. Copper gained 12 percent over the prior five weeks on the London Metal Exchange and reached a 27-month high on Oct. 19.
The “sharp price increase” prompted some investors to sell, said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. He pointed to the dollar as today’s main influence on prices, with “copper and the other base metals probably staying around current levels.”
Copper for delivery in three months fell $1 to $8,306 a metric ton at 10:12 a.m. on the LME. The contract has shed 1.1 percent this week. December-delivery copper slipped 0.1 percent to $3.7775 a pound on the Comex in New York.
A stronger dollar makes commodities priced in the U.S. currency more expensive in terms of other monies and erodes demand for raw materials as an alternative investment. LME copper this week reached $8,492 a ton, the highest intraday price since July 7, 2008.
G-20 policy makers are convening amid concern countries are pursuing weaker exchange rates to support growth, either by limiting currency gains with intervention such as China or by discussing monetary easing, as the U.S. and U.K. have done.
The dollar fell in the previous five weeks on speculation Federal Reserve officials will signal that further credit-easing measures are needed to support growth when they meet next on Nov. 2-3.
Business confidence in Germany, the world’s third-largest copper user after the U.S. and China, unexpectedly climbed in October to a 3 1/2-year high. The Munich-based Ifo institute said its business climate index rose to 107.6, the highest level since May 2007, compared with the median estimate of 38 economists surveyed by Bloomberg News for a drop to 106.5.
LME copper stockpiles contracted for a 35th week in a row, matching a streak that ended in August 2004. They last climbed in the week ended Feb. 19 and shrank 0.6 percent this week. Today stockpiles fell 0.3 percent to 368,825 tons, the lowest since Oct. 23, exchange figures showed.
Copper stockpiles monitored by the Shanghai Futures Exchange rose for a third week to 106,275 tons, the highest level in almost two months, the bourse said today.
Orders to draw copper from LME inventories, or canceled warrants, were unchanged today at 28,475 tons. They jumped 23 percent this week, the third weekly advance in a row.
Zinc climbed 1.3 percent to $2,505 a ton after reaching $2,525, the highest intraday price since April 16. Suspended output at Shenzhen Zhongjin Lingnan Nonfemet Co.’s Shaoguan smelter in China will have little effect on local zinc and lead prices because supplies are ample, said Beijing Antaike Information Development Co.
“The halt in output will support prices in the short term, as disruptions tend to,” Feng Juncong, chief zinc and lead analyst at Antaike, said by phone. Still, “if you take it in the context of China’s total production, the impact is not big.”
Lead gained 0.6 percent to $2,500 a ton after reaching $2,519, the highest price since Jan. 14.
Aluminum advanced 0.1 percent to $2,353 a ton. China will sell 96,000 tons of aluminum ingots from state stockpiles on Nov. 1-2, the state reserve authority under the National Development and Reform Commission said on its website.
“China has already proved in the past that they are very good traders,” Commerzbank’s Briesemann said. “We might be very close to peak aluminum prices.”
Tin for three-month delivery on the LME slid 0.4 percent to $26,350 a ton. Prices reached a record $27,338.50 on Oct. 14. The metal has jumped 55 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of the Congo.
Nickel fell 1 percent to $23,325 a ton.