Nov. 17 (Bloomberg) -- Copper fell to a seven-week low in New York as China, the world’s largest consumer of the metal, moved to limit inflation, potentially eroding demand.
China’s government may impose temporary price controls on “important daily necessities” and production materials to counter the fastest inflation in two years, the cabinet confirmed. The Shanghai Composite Index of equities slid to the lowest close in almost a month. Copper also dropped as European finance ministers began work on possible aid for Irish banks.
“Concerns over China’s tightening plus euro-zone woes are driving the market,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.
Copper for delivery in March declined 4.35 cents, or 1.2 percent to $3.6875 a pound at 8:04 a.m. on the Comex in New York. Copper for delivery in three months slid 0.7 percent to $8,095 a metric ton on the London Metal Exchange. Prices reached $3.611 and $7,920, the lowest intraday levels since Sept. 28.
LME copper may decline as low as $7,600 a ton depending on developments in Europe and aid to Irish banks, Charles Cooper, an analyst at Oriel Securities Ltd. in London, said by telephone. Prices above $8,000 deterred end-user buyers, he said.
European Union and International Monetary Fund experts will start scanning the books of Ireland’s debt-laden banks tomorrow in a prelude to a possible aid package to stem Europe’s widening fiscal crisis.
China’s central bank may raise interest rates as soon as Nov. 19 because of inflationary pressure, the China Securities Journal said today. Inflation in the country climbed to a two-year high of 4.4 percent in October.
A Chinese consumer-confidence index fell for the first time in six quarters on expectations that prices of goods and services will keep increasing, according to a statement from Nielsen Co. and the Chinese statistics bureau’s Economic Monitoring and Analysis Center.
The LME index of the six main industrial metals traded on the exchange yesterday slumped 6.3 percent, the most since May 4, as zinc plunged 8.5 percent.
“We see short-term weakness, followed by a rebound in metal prices going into the last part of the first half next year,” Oriel’s Cooper said. Copper supply will fall short of demand by 380,000 tons next year, he said.
Zinc for three-month delivery on the LME today slid 2 percent to $2,096.25 a ton, rebounding from a retreat of as much as 5.6 percent.
Tin dropped 0.7 percent to $24,350 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 44 percent this year, leading LME advances, after production was disrupted in Indonesia and the Democratic Republic of the Congo.
Aluminum rose 0.6 percent to $2,255 a ton and nickel added 2.7 percent to $21,380 a ton. Lead dropped 0.6 percent to $2,241.75 a ton.
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