Copper in London pared an advance in Asian trading, heading for a weekly loss, on concern record production in China bolstered supplies and further government curbs on lending may dim the outlook for domestic metal demand.
Three-month-delivery copper on the London Metal Exchange gained 0.3 percent to $9,444.50 a metric ton at 1:14 p.m. Singapore time, trimming an earlier gain of as much as 1.1 percent. The contract dropped to $9,350 a ton yesterday, the lowest since April 5. All six LME metals advanced.
China’s output of refined copper in March increased in March to 470,000 tons, up 24 percent from a year earlier, the statistics bureau said today. That’s a monthly record, according to Minmetals Starfutures Co.
“China is quite well-supplied at the moment and this will weigh on the mood in the market,” said Minmetals’ analyst Li Ye. “It’s unclear what demand is, but it definitely doesn’t feel like the peak season.”
July-delivery copper on the Comex in New York traded unchanged at $4.3035 a pound, after gaining 0.7 percent earlier. The metal for June-delivery on the Shanghai Futures Exchange fell 0.7 percent to 70,630 yuan ($10,814) a ton at the midday break, reversing an earlier 0.6 percent advance.
Copper in London lost 4.4 percent this week, the most since the week ended March 11, on concern that China may extend its credit-tightening measures to cool inflation, weighing on metals demand. China’s consumer prices jumped 5.4 percent in March, the fastest pace since 2008, exceeding the median 5.2 percent forecast in a Bloomberg News survey of economists.
The Chinese economy grew 9.7 percent in the first quarter of this year and its foreign-exchange holdings jumped to a record $3 trillion, prompting speculation the government may further curb lending. Chinese officials are reining in lending to counter inflation after a record expansion of credit in 2009 and 2010, with the central bank boosting interest rates four times since mid-October and raising banks’ reserve requirements.
“Demand in China isn’t as strong as many are expecting, however hand-to-mouth buying during dips keeps a floor on prices,” Shen Xiaoqiang, senior analyst at Donghai Futures Co., said from Suzhou. “We’re seeing price gains even in the face of rising inventories, which could only mean there are still many bulls out there supporting the market.”
Inventories in LME warehouses have risen 19 percent this year, climbing to a nine-month high of 450,800 tons yesterday, while stockpiles in warehouses monitored by the Shanghai exchange were up 17 percent on year and stood at 154,229 tons last week.
Aluminum in London rose 0.6 percent to $2,658 a ton, zinc climbed 0.8 percent to $2,417 a ton, lead advanced 1.3 percent to $2,646.50 a ton, nickel increased 1.4 percent to $26,170 a ton and tin gained 1 percent to $32,560 a ton.
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