Copper may fall in New York and London on concern reports today will show weaker consumer confidence and sliding prices in the U.S., stoking concern the country’s economic rebound might stall. A report from Thomson Reuters/University of Michigan will probably show its preliminary consumer sentiment index for July fell to 74, according to a Bloomberg survey. Labor Department figures will probably show consumer prices in the U.S. dropped in June for a third month, indicating inflation is contained as the recovery cools, economists said. “The consumer price index will be important,” Daniel Brebner, an analyst at Deutsche Bank AG in London, said by phone. “If it’s too low, there will be worries of deflation.” Futures for September delivery gained 0.2 cent, or 0.1 percent, to $3.014 a pound at 8:01 a.m. on the Comex in New York, erasing a drop of as much as 0.4 percent. Copper for delivery in three months declined 0.3 percent to $6,661 a metric ton on the London Metal Exchange. The U.S. consumer price index declined 0.1 percent last month after a 0.2 percent drop in May, according to a Bloomberg survey. The figures are due at 8:30 a.m. Washington time, followed at 9:55 a.m. by the confidence report. The country is the world’s second-biggest copper user after China. Smaller Inventories Copper may rise next week as stockpiles monitored by the LME keep shrinking, according to a Bloomberg survey. Nine of 19 analysts, investors and traders, or 47 percent, said the metal will gain next week. Seven predicted lower prices and three expected little change. Today LME inventories fell for a 21st day to 426,425 tons, the lowest level since Nov. 23. They’re down 15 percent this year and headed for the first annual drop since 2004. Bookings to remove metal from LME warehouses rose for a third day, gaining 3.3 percent to the highest level in more than a week at 32,600 tons. Copper stockpiles monitored by the Shanghai Futures Exchange expanded from the lowest level in more than four months. Stockpiles increased 2.4 percent to 120,238 tons, the exchange said in a statement today on its website. They dropped last week to the lowest level since February. Aluminum for three-month delivery on the LME rose 0.6 percent to $2,029 a ton. Immediate-delivery metal’s discount to the three-month price, the so-called contango, narrowed to $16.25 yesterday, the lowest closing level since April 2007. Premium Widens The lightweight metal for August delivery on the LME yesterday traded at a $3.50 premium to September aluminum, a so- called backwardation that may indicate scarce supply and widened from $2.50 in the previous session. Metal tied into financing deals has declined to about 50 percent of LME stockpiles over the past quarter from around 80 percent, according to Deutsche Bank’s Brebner. Higher premiums encouraged the release of metals from warehouses, he said. Premiums paid for aluminum in North America climbed this month because of a scarcity of the metal, researcher CRU said. The Midwest premium increased to 6.5 cents a pound at the start of this month, analyst Marco Georgiou said yesterday. That was a five-year high and compares with 5.5 cents at the end of 2009, he said. LME-monitored aluminum inventories have dropped 5.5 percent this year to 4.38 million tons. Today they fell 0.2 percent. Lead rose 0.1 percent to $1,800 a ton and nickel dropped 0.4 percent to $19,325 a ton. Zinc gained 0.9 percent to $1,824 a ton and tin slipped 0.2 percent to $17,900 a ton.

Source