Copper erased gains on renewed concern that China, the world’s largest user, will step up measures to combat asset-price gains after raising borrowing costs this week for the third time in four months.
Three-month copper on the London Metal Exchange fell as much as 0.2 percent to $9,911 a metric ton and was at $9,922 at 3:02 p.m. in Singapore, extending this week’s loss. The metal, which ended last week at $10,050 a ton, reached a record $10,160 a ton on Feb. 7. Contracts in Shanghai and New York also fell.
China’s central bank imposed differentiated reserve requirement ratios on some of the nation’s small and medium- sized lenders after the Lunar New Year holiday that ended Feb. 8, the official China Securities Journal reported today, citing an unidentified person.
“There is talk that the reserve ratio for all commercial banks will be raised this evening, and that’s weighing on sentiment,” Cheng Xiaoyong, an analyst at Baocheng Futures Co., said from Zhejiang.
May-delivery metal on the Shanghai Futures Exchange, which re-opened on Feb. 9 after the Lunar New Year break, dropped as much as 0.6 percent to 75,400 yuan （$11,433） a ton, erasing an earlier gain of 0.9 percent. Futures in New York lost as much as 0.5 percent to $4.52 a pound after climbing 0.8 percent earlier.
Copper in London has declined 1.2 percent this week after the People’s Bank of China raised the one-year lending rate by a quarter point and the one-year deposit rate an equivalent amount on Feb. 8, ahead of a report next week that economists say may show inflation accelerated to the fastest in 30 months.
Sentiment Affected
“The impact is really on market sentiment rather than having any real effect on combating inflation,” Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai.
Egyptian President Hosni Mubarak defied growing calls for his resignation, raising concerns about escalating geopolitical tension in the Middle East.
“These latest developments in Egypt will be negative for sentiment in the market,” Kelvin Tay, Singapore-based chief investment strategist at UBS Wealth Management, said on Bloomberg Television. “Sentiment in the Asia-Pacific market has not been positive.”
Tin climbed as much as 1 percent to a record $31,800 a ton, surpassing the previous peak of $31,650 reached on Feb. 8, before dropping 0.3 percent to $31,400. Output of refined tin by PT Timah, Indonesia’s largest producer, was 40,413 tons last year, down from 45,086 tons in 2009, the company said Feb. 7.
Tin was the LME’s best performer last year, jumping 59 percent as supplies from Indonesia, China and the Democratic Republic Congo dwindled. China is the world’s largest producer and Indonesia the largest exporter.
Aluminum and lead in London were little changed at $2,535 a ton and $2,507 a ton respectively. Zinc fell 0.4 percent to $2,440 a ton, while nickel rose 0.5 percent to $27,980 a ton.
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