METALS-Copper drops as China real estate issues trigger demand fears
(Update prices, add quotes)
October 6 (Reuters) – Copper prices in London fell on Wednesday as demand worried about the possibility of more defaults from Chinese property developers.
The cash-strapped China Evergrande group deteriorated risk sentiment amid fears of a wider financial crisis and a potential drag on Chinese construction activities, which consume large amounts of metals.
“Fantasia Holdings Group was the latest Chinese developer to go into crisis after failing to repay a maturing bond. This adds to the strains of the country’s heavily indebted real estate companies following Evergrande’s debt problems, ”ANZ analysts said in a note.
A firmer dollar, fueled by nervousness that surging energy prices could spur inflation and interest rate hikes, has also made greenback-denominated metals more expensive for holders of other currencies. .
Three-month copper on the London Metal Exchange fell 1.1% to $ 9,069 a tonne at 6:20 a.m. GMT, aluminum fell 0.3% to $ 2,912.50 a tonne, nickel fell 0.4% to $ 18,055 per tonne while lead increased 0.4% to $ 2,161 per tonne.
The threat of supply disruption to Peru, the world’s second largest producer of mined copper, has also added to the pressure.
The Peruvian government said on Tuesday it had reached an agreement with MMG Ltd’s Las Bambas mine and a local community to avoid roadblocks that threaten production at the huge copper mine.
Trade was lukewarm as China is on vacation from October 1-7.
* Brazilian miner Vale SA said on Tuesday that copper concentrate production at its Salobo mine was on hold due to a fire affecting a conveyor belt.
* LME cash nickel was at a premium of $ 11.50 on the three month contract CMNI0-3, indicating tight supplies nearby as stocks plummeted in global exchange warehouses.
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Report by Mai Nguyen in Hanoi; Editing by Krishna Chandra Eluri and Ramakrishnan M.