BLBG: Copper Declines in New York as Traders Judge Rally Overdone
Copper fell the most in a week in New York as traders judged that a four-day rally left prices no longer reflecting the outlook for demand.
Copper had risen 12 percent in four sessions on speculation that manufacturing will rebound, strengthening demand for the metal used in wires and pipes. China, the biggest user, imported a record amount in March and supplies of scrap metal dwindled after last year’s 54 percent drop in prices.
The “focus has been on Chinese buying, whether for stockpiling or whether to replace scrap,” said Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London. While China consumes about 25 percent of the world’s copper, demand elsewhere is still weak and “not getting better quickly,” he said by phone.
Copper for July delivery fell 2.2 cents, or 1 percent, to $2.122 a pound on the Comex division of the New York Mercantile Exchange, as of 12:12 p.m. in London. The metal reached $2.177 a pound earlier today, the highest intraday price since April 20.
“We think that copper prices have reached a top and expect prices to decline in the weeks ahead,” Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich, said in a report May 4.
Copper for delivery in three months on the London Metal Exchange was up 0.8 percent at $4,636 a metric ton, reflecting some of the gains on Comex yesterday when the London bourse was shut for a public holiday.
Copper Stockpiles
Total stockpiles in warehouses monitored by the LME shrank 1 percent to 394,925 tons today. Inventories are still more than three times higher than a year earlier after a collapse in demand that Macquarie Group Ltd. estimates may be the steepest since 1975.
“Copper has run way ahead of its fundamentals,” Citigroup Inc. analysts said in a report today.
Copper for immediate delivery traded at $4.50 a ton more than the benchmark three-month contract on May 1, signaling tighter supplies. It was the third consecutive day the market was in so-called backwardation.
Among other metals for delivery in three months, aluminum fell $14, or 0.9 percent, to $1,525 a ton. Stockpiles in LME- monitored warehouses rose to a record 3.8 million tons.
Aluminum has fallen 1 percent this year, after retreating 36 percent in 2008. Zinc rose 1 percent to $1,530 a ton and lead gained 2.4 percent to $1,433.25. Tin rose 2 percent to $12,700 and nickel was up 1.4 percent to $12,065.
