May 5 (Bloomberg) -- Copper rose from the lowest level in almost nine weeks on speculation yesterday’s plunge overstated the risk from slowing China demand.
Three-month delivery copper on the London Metal Exchange climbed as much as 0.7 percent to $7,077.75 a metric ton and traded at $7,055 by 9:34 a.m. in Shanghai. The metal tumbled to $6,998 a ton yesterday, the lowest since Feb. 25 and the biggest one-day decline since January 2009. Aluminum, lead and zinc also gained.
The Reuters/Jefferies CRB Index of 19 raw materials fell 2.4 percent yesterday, the biggest slide since Feb. 5 as the dollar rose on European debt concerns. China, the world’s biggest metals user, will raise the bank reserve ratio from May 10, the third increase this year, and yesterday reported a slowdown in manufacturing growth.
“The bank reserve ratio hike may have reduced the likelihood of an imminent interest rate increase,” Zhao Kai, an analyst at Jinrui Futures Co. said from Shenzhen. “Selling pressure may have been exhausted.”
Copper in Shanghai slumped as much as 3.4 percent to 56,220 yuan ($8,235) a ton, the lowest price since Feb. 12, and traded at 56,720 yuan at 9:22 a.m. local time.
“We’ll need to see how the market reaction evolves to China’s measures,” Guo Yong, another Jinrui analyst said. “Technically there’s support for copper at the $7,000 price level.”
Aluminum in London climbed 0.7 percent to $2,178 a ton, zinc increased 1.6 percent to $2,182 a ton and lead gained 1.5 percent to $2,090 a ton. Nickel slid 0.7 percent to $24,490 and tin was yet to trade.
--Li Xiaowei. Editors: Richard Dobson, Gavin Evans.
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