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Shanghai Copper Advances on U.S. Rate Cut; Zinc, Aluminum Gain
Copper rose in Shanghai on speculation demand for the metal will rise because this week's interest rate cut by the U.S. Federal Reserve will help contain a housing slump in the world's largest economy.
The Fed cut its benchmark lending rate on Sept. 18 by half a point, more than economists forecast, to 4.75 percent. Copper often moves in tandem with growth in major economies.
``At the back of people's minds, the credit and housing problems in the U.S. are far from over, but the larger-than- expected rate cut offers investors some psychological assurance, which is giving a boost to metal prices,'' Shen Xiaoqiang, research manager at Jian Zheng Futures Co. in Jiangsu, China, said by telephone today.
Copper for December delivery on the Shanghai Futures Exchange rose as much as 680 yuan, or 1 percent, to 67,730 yuan ($9,012) a metric ton, and ended the day at 67,220 yuan a ton.
The metal for immediate delivery in Changjiang, Shanghai's biggest cash market, gained as much as 1.4 percent to 67,390 yuan a ton.
``At these prices, activity in the physical market is not lively, but demand is expected to increase in the fourth quarter and people will buy then if they have to, whatever the price,'' said Shen.
London Metal Exchange copper for delivery in three months fell 0.4 percent to $7,855 a ton at 3:32 p.m. in Shanghai, after gaining 4 percent yesterday. December delivery copper on the Comex division of the New York Mercantile Exchange was down 0.2 percent at $3.5680 a pound, after climbing 3.7 percent to $3.5755 a pound yesterday.
U.S. Data
``The rally in the international markets yesterday was too exuberant, given that the economic data out of the U.S. last night was bearish for metals,'' Shen said.
Builders in the U.S. broke ground on 1.331 million homes at an annual rate, the Commerce Department said in Washington yesterday, the fewest in 12 years and less than economists had forecast. Builders are the largest users of copper in the U.S., the world's second-largest consumer of the metal.
``There is still no sign of either the housing market or the residential construction industry hitting bottom and starting to stabilize,'' John Kemp, a London-based analyst at Sempra Metals Ltd., one of 11 companies trading on the floor of the London Metal Exchange, wrote in a report yesterday.
Separately, U.S. consumer prices unexpectedly dropped 0.1 percent from July, the first decline this year, the Labor Department reported yesterday.
Other Metals
Zinc in Shanghai for November delivery rose 0.5 percent to close at 26,820 yuan a ton, and LME zinc was down 1.3 percent at $2,945 a ton at 3:37 p.m. Shanghai time. Shanghai December aluminum ended up 0.2 percent at 19,370 yuan a ton. LME aluminum was 0.4 percent lower at $2,473 a ton.
Among other LME-traded metals, nickel fell 0.4 percent to $33,650 a ton at 3:39 p.m. in Shanghai. Lead lost 1.1 percent to $3,200 a ton, while tin didn't trade in Asia after rising yesterday to $15,350 a ton.
