BLBG: Copper Prices Decline on Speculation Demand in China May Weaken
June 18 (Bloomberg) -- Copper prices fell on speculation that expanding stockpiles in China may signal weakening demand in the world’s biggest user of the metal.
Inventories of copper in Shanghai warehouses rose to the highest since March 2008 last week. Imports of copper into China are likely to slow in the next few months, said Max Layton, an analyst at Macquarie Bank Group Ltd. in London.
“We are expecting some pretty big tonnage increases in Shanghai inventories over the next two months,” Layton said by telephone. China’s demand for the metal usually weakens in the third quarter, the analyst said.
Copper futures for September delivery declined 1.5 cents, or 0.7 percent, to $2.2545 a pound at 10:58 a.m. on the New York Mercantile Exchange’s Comex division. Copper for delivery in three months slipped $15, or 0.3 percent, to $4,945 a metric ton on the London Metal Exchange.
“While copper is widely perceived to have the strongest fundamentals of any of the base metals on a one- to two-year view, in the short term, we have concerns that the market could face a significant pullback,” Macquarie Group analysts including Jim Lennon and Adam Rowley said today in a report. “The key concern centers around the scale of Chinese buying,” the analysts said.
“There is an $80 trading range in evidence today, indicative of the undecided mood,” Edward Meir, an MF Global Ltd. analyst, said earlier by e-mail. The LME range has since widened to $119 today. “Our charts do not look as constructive as they did last week, with the short-term trend now broken.”
Aluminum Gains
In other LME markets, aluminum rose $13, or 0.8 percent, to $1,635 a ton, taking its gain this year to 6.2 percent. Aluminum stockpiles in warehouses monitored by the exchange expanded 88 percent this year to a record 4.4 million tons today.
“The metals have been struggling for direction,” analysts at Barclays Capital said in a report. “Economic data has been mixed and concerns over Chinese demand are still lurking in the background.”
About three-quarters of LME aluminum inventories are locked into financial accords, according to Greg Wittbecker, director of materials management at Alcoa Inc., the biggest U.S. producer of the metal.
Among other LME metals, lead rose 0.6 percent to $1,674.25 a ton and zinc gained 0.8 percent to $1,565 a ton. Tin slipped 0.5 percent to $15,025 a ton, and nickel climbed 1 percent to $14,999 a ton.
