BLBG: Copper Drops in London as Dollar Strengthens, Stockpiles Expand
June 15 (Bloomberg) -- Copper fell for a second day in London as a stronger dollar made the commodity costlier for those holding other currencies and on speculation that swollen stockpiles in China signal the nation is oversupplied.
The Dollar Index, a gauge of the currency’s value against six major counterparts, rose for a second day. Inventories of copper in Shanghai warehouses rose to the highest since March 2008. China is the world’s biggest consumer of the metal, which advanced 5.1 percent last week and reached $5,388 a metric ton on June 11, the highest since October.
“The big winners last week have seen further liquidation today,” Leon Westgate, an analyst at Standard Bank Group Ltd. in London, said by phone. “The dollar is the main driver.”
Copper for three-month delivery fell as much as $180, or 3.4 percent, to $5,055 a ton on the London Metal Exchange. The contract retreated 3.3 percent to $5,060 at 9:56 a.m. local time. The metal has advanced 65 percent this year.
Copper futures for July delivery fell 7.4 cents, or 3.1 percent, to $2.2995 a pound on the New York Mercantile Exchange’s Comex division.
In Shanghai, copper fell by the exchange-imposed 5 percent daily limit. Chinese demand has meant copper on the Shanghai exchange trading at a premium to the LME since February, London- based Macquarie Group Ltd. said in a report.
“We expect Chinese imports to slow after June as demand enters a seasonally weak period and the arbitrage window is closed,” the bank said. Global copper supply will outpace demand by 745,000 tons this year, moving into a deficit of 44,000 tons next year, Macquarie estimates.
Copper in Warehouses
Stockpiles of copper in warehouses monitored by the LME slid for a 27th straight session to 286,975 tons, the lowest since Nov. 26. Inventories have declined 48 percent from a high this year on Feb. 25.
Hedge-fund managers and other large speculators increased their net-short position in New York copper futures in the week ended June 9, according to U.S. Commodity Futures Trading Commission data June 12.
Among other LME metals for three-month delivery, aluminum fell 1.8 percent to $1,615 a ton. Tin fell 1.9 percent to $15,350 a ton, nickel slid 4.1 percent to $15,050 a ton and lead lost 2.4 percent to $1,742 a ton. Zinc fell 3.7 percent to $1,627 a ton.
