By Glenys Sim
Dec. 10 (Bloomberg) -- Copper rose in Asia after producer- price inflation in China, the world’s largest user of the metal, slowed to the weakest pace in more than two years, giving the central bank more room to cut borrowing costs to stimulate growth.
The metal also rose after equities gained on speculation a bailout of U.S. automakers and government stimulus plans will revive global economic growth.
“The market jumped after the producer price index figures were released,” said Jia Zheng, an analyst at Southwest Futures Co. from Shanghai. “Investors probably took it as a sign of further rate cuts ahead.”
London Metal Exchange copper advanced as much as 2.2 percent to $3,269 a metric ton, and was at $3,256 at 3:01 p.m. Singapore time. It fell as much as 1.6 percent in early Asian trade.
March-delivery copper on the Comex division of the New York Mercantile Exchange advanced 3 percent to $1.4865 a pound, while copper for February delivery on the Shanghai Futures Exchange gained 4.9 percent to end the day at 25,300 yuan ($3,686) a ton.
The Chinese central bank slashed rates by the most in 11 years last month to stimulate growth as the global recession slashed export demand and manufacturing contracted. China’s exports may have contracted last month as industrial output cooled, Fan Gang, an adviser to the central bank, said yesterday.
“We’re going to get depressed prices, probably into the first quarter of next year, as weak economic data continues to come through,” said Jia. “Any effects of stimulus packages will take time to filter through to consumption and prices.”
Aluminum Tax
Aluminum futures in Shanghai surged by the exchange-imposed daily limit on speculation China may cancel a 15 percent export tax as part of measures to bolster slowing economic growth.
China may end the tax on primary aluminum so producers can boost sales overseas as domestic demand wanes, said traders and analysts. The Asian nation is the world’s largest producer of the metal used in cars and airplanes.
“A full removal is not very believable, however any reduction or cancellation of the tax will definitely boost exports,” said Jia. “This will help to reduce the excess inventory that has been surfacing because of weak domestic demand.”
February-delivery aluminum jumped 4 percent from the previous settlement price, to 10,125 yuan a ton, while aluminum on the LME rose 0.9 percent to $1,525 a ton at 3:02 p.m. in Singapore.
China has increased export tax rebates on some copper, aluminum and steel products as part of a stimulus plan to try and revive growth and shield the world’s fourth-largest economy from the impact of the global credit crunch.
Among other LME-traded metals, zinc added 1.4 percent to $1,130, lead gained 3.8 percent to $1,007, and tin rose 0.6 percent to $11,875. Nickel had not traded as of 3:05 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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