News

Copper Leads Metals Down in Asian Trading as Commodities Slump

March 20 (Bloomberg) -- Copper fell for a second day on the London Metal Exchange, extending a decline to the lowest in more than a month on speculation the dollar's slump is near an end.

Other LME contracts, except tin, also reached the lowest in weeks on selling of commodities, which some investors had bought previously as a hedge against a weaker dollar and inflation. An index tracking six industrial metals fell 2.8 percent to 4,001.3 yesterday, the lowest since Feb. 18.

``The extent of declines on the LME was quite a surprise, and it's pressuring Shanghai markets today,'' Li Xun, chief analyst at Shanghai Dalu Futures Co., said by phone today. Investors who bet on gains ahead of the Fed cut ``must have sold massively for profits, deeming recent gains overdone,'' he said.

The dollar is gaining after the U.S. Federal Reserve cut the benchmark lending rate by a less-than-expected 75 basis points this week. The dollar index, which tracks the currency against six major counterparts, rose 0.8 percent yesterday, the biggest gain in five weeks, and was up 0.1 percent at 72.244 at 3:30 p.m. in Shanghai today.

London Metal Exchange copper for delivery in three months fell $154, or 1.9 percent, to $7,825 a metric ton at 3:43 p.m. Shanghai time, the lowest intraday price since February 18.

Copper for June delivery fell 2,370 yuan, or 3.6 percent, to close at 62,730 yuan ($8,892) on Shanghai Futures Exchange. Metal for immediate delivery in Changjiang, Shanghai's biggest cash market, fell as much as 2.6 percent to 64,160 yuan a ton.

Investor Interest

The number of open contracts, or buy and sell positions, on Shanghai copper was more than 160,000, which was ``a substantial amount, reflecting healthy investor interest and good liquidity'' in the metal, Shanghai Dalu's Li said, adding the impact of China's reserve ratio policy probably went little beyond the psychological level.

China told banks to set aside more reserves on March 18, the second time this year, in a bid to curb inflation which is at an 11-year high.

London zinc for delivery in three months fell 1.7 percent to $2,370 a ton at 3:48 p.m. Shanghai time. Shanghai zinc dropped by the exchange-imposed daily limit of 4 percent from the previous settlement to 19,420 yuan a ton and closed at that level.

``Shanghai zinc was closer to its fundamentals than its London counterpart,'' said Yuan Xiaoning, a trader at Minmetals StarFutures Co., by phone from Shanghai today. ``We see 19,000 yuan as a support level for the metal for the short term as that's the price domestic users identify with.''

London three-month aluminum was down 0.9 percent at $2,895 a ton and Shanghai June-delivery aluminum fell 1.3 percent to 19,115 yuan a ton.

Among other-LME traded metals, lead fell 3.7 percent to $2,731 a ton, nickel declined 1.4 percent to $28,900 a ton, and tin was down 1.3 percent at $20,305 a ton. Tin reached a record high $20,950 a ton on March 18.

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