BIZCHINA / Recent Adjustments
Shanghai copper lower on China rate rise
(Reuters)
Updated: 2007-03-19 15:56
Shanghai copper prices edged lower on Monday, under pressure after China
raised interest rates, sparking fears that demand from the world's
largest copper consumer could ease.
The most-traded June contract on the Shanghai Futures Exchange was at
60,850 yuan ($7,867) a tonne at midday, down 0.3 percent from 61,030 yuan
at Friday's close.
Related readings:
Shanghai Composite Index closes at 3,014.44 points
Interest rate up to check lending growth
Central bank raises benchmark interest rates by 0.27%
Stocks take a dive on rate rise fear
Spot copper in Shanghai was up 175 yuan at between 60,700 and 61,000 yuan.
China's central bank said over the weekend it was raising its lending and
deposit rates by 0.27 percentage points, taking the one-year benchmark
deposit rate to 2.79 percent and the lending rate to 6.39 percent in its
latest attempt to clamp down on robust credit and investment growth.
"China's fixed assets investment in the rest of year could decrease on
the interest rate hike, and the decline will restrain domestic demand of
metals," said analyst Yang Jun at China Futures in Chongqing.
However, others said the move would have a limited effect beyond an
initial kneejerk.
"We have seen credit curbs a number of times in recent years but they
haven't contributed much to slowing metals demand in China," Gerard Burg,
minerals and energy economist at National Australia Bank, said.
"Short term, this will have an impact on sentiment. Investors have been
concerned about Chinese growth and we might see some price movement
downwards. From a fundamental perspective, this won't make much
difference and the growth story remains in place, underpinning metals
prices."
Analyst Pang Ying at Minmetals Star Futures in Shenzhen noted that an
interest rate hike of just 0.27 percentage points would have only a
limited influence on fixed-asset investment.
"So I think metals markets will not be impacted a lot."
That sentiment was also supported by mining stocks.
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