Copper extended losses as tensions on the Korea Peninsula reduced the appeal of riskier assets and concern over China’s monetary tightening policies damped the demand outlook for metals.
The metal for three-month delivery dropped as much as 0.8 percent to $8,175 a metric ton on the London Metal Exchange and traded at $8,222 at 12:56 p.m. in Shanghai. Copper for March delivery on the Comex in New York declined 0.5 percent to $3.744 a pound.
“Copper looks to have further downside as the U.S. dollar rebounds,” Fang Junfeng, an analyst at Shanghai CIFCO Futures Co., said by phone. “The tensions between North and South Korea now offer some support for a dollar gain.”
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, advanced as much as 0.4 percent to 80.652, the strongest level since Sept. 21, after China’s attempt to have an “emergency” six-party meeting in December yesterday failed.
South Korean President Lee Myung Bak told visiting Chinese State Councilor Dai Bingguo yesterday in Seoul the time isn’t right to resume six-party talks with North Korea, Yonhap News said. Lee vowed today to make Kim Jong Il’s regime pay for military attacks after it shelled a South Korean island, killing four people.
The Dollar Index’s recent gains mark a “turning point” that may see the gauge climb another 5 percent by April, based on analysis on trading patterns, Bank of Tokyo-Mitsubishi UFJ Ltd. said Nov. 26.
Policy Shift
In China, the world’s largest metals consumer, concern over further tightening measures continue to damp market sentiment. China’s stocks fell, with the benchmark Shanghai Composite Index falling 0.6 percent.
In a further measure to control speculation, the Shanghai Futures Exchange will start to increase margins after the market closes today. The rates on copper, aluminum, steel wire, gold and fuel oil futures will rise to 10 percent, steel-reinforcing bars and zinc to 12 percent, and rubber to 13 percent.
The bourse will also widen the daily price-move limits for all products to 6 percent, starting tomorrow.
Copper for March delivery in Shanghai closed the morning session 0.4 percent higher at 61,930 yuan （$9,284） a ton after falling as much as 0.8 percent.
Double Demand
The country will shift from the “extremely loose” monetary policy from the past two years taken during the financial crisis, the Zhejiang news website Zjol.com cited central bank adviser Li Daokui as saying on Nov. 27.
Rio Tinto Group, the world’s third-largest mining company, expects demand for some metals, including iron ore and copper, will double over the next 15 years to 20 years, Chief Executive Officer Tom Albanese said today. Demand will be driven by the increasing modernization of developing nations, he said.
In Chile, Anglo American Plc and Xstrata Plc’s Collahuasi venture in northern Chile continues to operate normally as a strike at the world’s fourth-largest copper mine entered a fourth week. The company is employing non-union employees and contract workers, while it negotiates individually with union members, a spokeswoman said on Nov. 26.
Aluminum in London was little changed at $2,273 a ton, zinc advanced 0.4 percent to $2,113 a ton, and lead was little changed at $2,283.25 a ton. Tin gained 0.6 percent to $24,353 a ton, while nickel was little changed at $22,565 a ton.
--Helen Sun. Editor: Matthew Oakley.
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