Copper Declines as China May Take Steps to Cool Inflation, Damping Demand

Copper resumed a decline in London and New York on concern that China, the world’s biggest metals consumer, may take further steps to cool price gains, damping demand for commodities. Zinc, lead and tin fell.

Copper for three-month delivery on the London Metal Exchange dropped as much as 1.3 percent to $8,535 a metric ton, and traded at $8,545 a ton at 1:55 p.m. Singapore time. The metal gained 0.4 percent yesterday as retail sales in the U.S., the second-largest user, climbed the most in seven months.

“The macroeconomic outlook continues to weigh on investor sentiment, especially what additional measures the Chinese government will take to cool the economy,” Wu Yuanfeng, an analyst at New Century Futures Co., said from Zhejiang.

March-delivery copper on the Comex in New York fell as much as 0.9 percent to $3.8885 a pound, while futures in Shanghai lost as much as 1.1 percent to 64,230 yuan （$9,669） a ton before trading at 64,530 yuan.

China will introduce measures to control rising food prices, including subsidies and limits on how much products may be sold for, the China Securities Journal reported, citing an unidentified person. The government will also increase punishment for speculators in cotton and corn, it said.

The country will raise interest rates “very soon” to tackle inflation, Andy Xie, an independent economist, said in a Bloomberg Television interview in Hong Kong.

Chile Stoppage

Workers at Anglo American Plc and Xstrata Plc’s Collahuasi copper mine in northern Chile will lower their wage demands in government-mediated talks to end an 11-day strike if the company increases its proposal, union leader Manuel Munoz said in an interview with Bloomberg News yesterday.

“Today’s U.S. industrial production figures for October will provide the next trading impetus,” Stefan Graber, an analyst with Credit Suisse Group AG, wrote in a note today. “We would argue that medium-term fundamentals continue to point toward firming demand conditions.”

Industrial production in the U.S., the world’s second- largest copper consumer, probably expanded in October, rebounding from the first decrease in more than a year and signaling manufacturing continues to support the economic recovery, according to a Bloomberg News survey of 78 economists.

Zinc and lead in London tumbled for a third day. Zinc dropped 2.4 percent to $2,281 a ton and lead declined 1.4 percent to $2,420 a ton. Aluminum lost 0.8 percent to $2,382 a ton, tin shed 1.2 percent to $25,600 a ton, while nickel slipped 0.5 percent to $22,250 a ton.