Copper Declines as Surging Energy Costs Spur Concern Economies May Weaken

Copper in New York fell for the first time in five sessions on concern that surging energy costs will hinder the global economy, eroding demand for industrial metals.

Crude oil topped $100 a barrel for a second day on concern that the unrest curbing exports from Libya will spread to other countries in the region. European producer-price inflation accelerated more than economists forecast in January. Officials at the European Central Bank including Juergen Stark have signaled they are ready to raise borrowing costs if needed.

A number of countries probably will raise interest rates to curb inflation, Edward Meir, a senior analyst at MF Global Holdings Ltd. in Darien, Connecticut, said in a report. “This scenario does not put us into the camp with those who are looking for ever-increasing commodity prices over the course of 2011.”

Copper futures for May delivery slid 1.15 cents, or 0.3 percent, to close at $4.498 a pound at 1:22 p.m. on the Comex in New York. The price gained 5.1 percent in the previous four sessions on signs that the U.S. economic recovery is accelerating.

“Higher energy costs chew up disposable income and act as a de facto monetary tightening,” said David Thurtell, an analyst at Citigroup Inc. in London.

Copper inventories tracked by the London Metal Exchange have climbed 12 percent this year. Futures in New York have gained 32 percent in the past 12 months, reaching a record $4.6575 on Feb. 15.

On the LME, copper for delivery in three months climbed $30.50, or 0.3 percent, to $9,890 a metric ton ($4.49 a pound). Lead also gained. Aluminum, tin, zinc and nickel declined.

The LME said in a member notice it is changing procedures on closing prices to make them more transparent starting March 14.

(Source: http://www.bloomberg.com/news/2011-03-02/copper-falls-in-london-trading-as-100-oil-revives-slowdown-speculation.html)