Copper Leads Base Metals Advance as Ireland Seeks Assistance

Nov 22 （Bloomberg） -- Copper led an advance in base metals after Ireland sought international help to avoid becoming the second euro nation to need a rescue, preventing potential contagion and boosting the global economic outlook.

The metal for three-month delivery climbed as much as 1.3 percent to $8,516.75 a metric ton on the London Metal Exchange, and traded at $8,444 at 4:38 p.m. Singapore time. Aluminum increased 1.5 percent to $2,293.75 a ton and zinc gained 1.5 percent to $2,191.75 a ton.

“Copper is seeking direction amid an unclear macro picture in China, so it’s prone to be moved by the dollar and outside markets in the short term,” Liang Haisan, an analyst at Citic Newedge Futures Co., said by phone from Shanghai.

Irish Prime Minister Brian Cowen said on Nov. 21 in Dublin that he expects talks on the details of financial assistance for the country to be completed in the “next few weeks.” Finance Minister Brian Lenihan said the loan will be less than 100 billion euros （$137 billion）.

The euro rose for a fourth day against the dollar, reaching a one-week high after European Union finance ministers said the deal will create a capital fund for Ireland’s lenders. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, declined for a fourth day, losing as much as 0.7 percent.

Concern that tightening measures to cool inflation in China may have a negative impact on demand for commodities is exaggerated, JPMorgan Chase & Co. said in a note today.

“While the property sector in China will likely slow going into 2011 and there may be oversupply concern in the sector next year, there are enough infrastructure projects in the pipeline to ensure that fundamentals for China’s commodity demand will remain strong next year,” the report said.

Ratio Hike

China, the world’s largest metals consumer, ordered banks to set aside larger reserves for the second time in two weeks, raising the requirement 50 basis points starting Nov. 29, the central bank said on its website after Chinese markets closed Nov. 19. The aim is to step up liquidity management and “appropriately control” credit and loans, it said.

China’s reserve-ratio increase provided temporary relief to the market today, Tan Wentao, an analyst at HNA Topwin Futures, said by phone from Shanghai. “In this round of price controls, agricultural products are in focus, so metals should be less affected,” Tan said.

Copper for March delivery in Shanghai declined 1.3 percent to close at 63,420 yuan （$9,550） a ton.

China’s inflation may reach 6.3 percent next year, so the country may raise interest rates and the reserve requirement ratio by at least 150 basis points each over the next year to fight inflation, the Securities Times cited Tao Dong, a Credit Suisse Group AG economist in Hong Kong, as saying.

Imports Slump

Imports by China tumbled to the lowest level in two years, according to data provided by the customs department today. Shipments declined 30 percent to 169,897 tons in October, the lowest level since November 2008, as ample domestic supply and high international prices deterred buyers.

Copper stockpiles monitored by the Shanghai Futures Exchange increased to the highest level in five months as of Nov. 19. Inventories of copper gained for a third week, adding 11,313 tons to 126,736 tons, based on a survey of seven warehouses in Shanghai, the exchange said on its website.

Lead in London advanced 1 percent to $2,300 a ton, nickel gained 1 percent to $22,060 a ton and tin increased 0.8 percent to $25,200 a ton.

--Helen Sun. Editors: Matthew Oakley, Jarrett Banks.