Copper declined for the first time in three days on speculation that Europe’s debt crisis will worsen, derailing the global economic recovery and eroding demand for industrial metals.
Copper for three-month delivery fell as much as 0.6 percent to $8,258.5 a metric ton on the London Metal Exchange and was at $8,267.75 at 4:40 p.m. in Tokyo. The price touched $8,346 yesterday, the highest level since Oct. 5. Futures for delivery in May dropped 0.3 percent to close at 59,750 yuan ($9,583) a ton on the Shanghai Futures Exchange.
Spanish Premier Mariano Rajoy faces opposition calls to resign amid contested reports about illegal payments, and Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections this month. Europe accounts for 18 percent of copper demand, Barclays Plc estimates. The dollar strengthened against the euro, reducing the appeal of raw materials as alternative investments.
“Renewed concern over Europe’s debt crisis and the dollar’s strength provided copper an opportunity to take a breath after reaching a four-month high,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. The European Central Bank meets on Feb. 7 while euro-area leaders gather for a summit on Feb. 7-8.
“We could see prices push still higher as we near the Lunar New Year holiday in China, with copper potentially rallying to $8,430 in the next week,” analysts led by Mark Pervan at Australia & New Zealand Banking Group Ltd. said in a report today. Still “we don’t expect these gains to last and may see a retracement back to $8,150 soon after the holiday.”
Copper for delivery in March retreated 0.2 percent to $3.762 a pound on the Comex in New York.
On the LME, zinc fell 1.1 percent to $2,161.50 a ton after touching $2,190 yesterday, the highest since Jan. 27, 2012, and nickel declined 1.1 percent to $18,520 a ton after reaching $18,770 yesterday, a four-month high. Tin and lead also dropped, while aluminum was little changed.