BLBG: Copper Reverses Gains in London on Report of More Inventories
Copper dropped in London, erasing earlier gains, as higher inventories and recessions in the U.S., Europe and Japan cast doubt on increased investor demand for industrial metals. Nickel and aluminum also fell.
Inventories of copper, nickel, aluminum and zinc advanced today in the London Metal Exchange’s daily warehouse report, signaling more supply than demand. A U.S. leading index for metals including copper and aluminum is indicating “further activity deceleration in the near future,” the U.S. Geological Survey said in a report e-mailed on Jan. 2
“People are still in a state of flux not knowing what their order books will be,” said Kevin Tuohy, a trader at MF Global Ltd. in London. “I can’t see money flowing in at this point. It’s too early.”
Copper for delivery in three months fell $46, 1.4 percent, to $3,185 a metric ton as of 9:58 a.m. on the London Metal Exchange. Prices had climbed $59, or 1.8 percent, before the inventory report.
On the New York Mercantile Exchange’s Comex division, copper futures for March delivery declined 1.1 cents, or 0.8 percent, to $1.45 a pound.
Inventories of copper rose 1,500 tons to 342,050 tons, the most since Feb. 6, 2004. Aluminum stockpiles jumped 6,925 tons to 2.34 million tons, the most since Sept. 23, 1994. The three-month aluminum contract fell $15 to $1,555 a ton.
Recessions in the U.S., Japan and Europe combined with a slowdown in China, the world’s largest buyer of copper, left copper down 54 percent last year, the most since at least 1987.
Codelco’s Cut
Codelco, the world’s biggest copper producer, agreed to again cut its 2009 China sales surcharge, or premium, for copper to $72 a ton, after lowering it to $75 in November, two executives said.
Before today, copper increased 15 percent from a four-year low on Dec. 24. Rebounding prices reduced the chances of production cutbacks by miners and put the focus back on demand, Tuohy said.
U.S. consumer spending may be revived by President-elect Barack Obama’s stimulus package possibly worth $775 billion while Federal Reserve Bank presidents Janet Yellen and Charles Evans are calling for more government spending.
“Any sort of stimulus has the potential to be a positive,” Tuohy said.
Nickel dropped $450 to $12,750 a ton. Prices climbed 13 percent on Jan. 2. Tin fell $325 to $11,300 a ton.
Lead rose $5 to $1,095 a ton and zinc added $5 to $1,285 a ton.
