Copper Falls in New York as China’s Usage May Slow Mar 25, 2013 8:10 AM ET

Copper declined in New York on speculation China’s government will take steps to slow inflation, curbing metals demand.

China’s swap market is signaling interest-rate increases for the first time since 2011 after inflation accelerated to a 10-month high and the housing market defied government cooling efforts. Hedge funds are making the biggest bet against copper on record, U.S. government figures showed last week.

“The new government seems determined to constrain excessive rallies in real-estate and tackle the potential threat of inflation,” Michael Lewis, an analyst at Deutsche Bank AG in London, said in a report dated today. There are “falling expectatations for Chinese economic activity.”

Copper futures for May delivery fell 0.1 percent to $3.4625 a pound at 8:09 a.m. on Comex in New York.

Stockpiles of copper in warehouses monitored by the LME expanded another 0.5 percent 565,350 tons, the highest since October 2003, LME data today showed. Inventories have jumped 77 percent this year.

Speculators raised net-short positions in U.S. copper futures and options by 53 percent to 25,719 contracts in the week ended March 19, according to Commodity Futures Trading Commission data that begins in 2006.

Deutsche Bank on March 22 raised its global economic growth forecast to 3.2 percent this year, from 3.1 percent in December, and to 4 percent, from 3.9 percent, for next year. Zinc and aluminum are down at least 6 percent this year, copper has dropped 3.5 percent and lead is down 5.9 percent.

“We expect that some support might appear in the sector over the near-term given the more attractive pricing and overall improvement generally in global growth expected in 2013,” Lewis said.

Lead rose 0.2 percent and tin gained 0.4 percent on the London Metal Exchange.

To contact the reporter on this story: Claudia Carpenter in London at [email protected]

To contact the editor responsible for this story: Claudia Carpenter at [email protected]