BLBG: Copper Falls in London, Set for Weekly Drop on Demand Concerns
July 3 (Bloomberg) -- Copper fell in London and New York, heading for a weekly drop, on concerns a weakening U.S. labor market will damage the recovery in demand for industrial metals.
Payrolls in the U.S., the second-biggest consumer of copper after China, declined by 467,000 in June, a government report showed yesterday. The jobless rate climbed to 9.5 percent, the highest since August 1983.
“Prices are likely to weaken,” Mark Heyhoe, an analyst at Hanson Westhouse Ltd. in London, said by phone. “We need some positive news for investor demand to pick up again.”
Copper for three-month delivery slid $65, or 1.3 percent, to $4,970 a metric ton by 4:57 p.m. on the London Metal Exchange. The contract has dropped 1.3 percent this week. Futures for September lost 1.7 percent to $2.2665 a pound on the New York Mercantile Exchange’s Comex division. The U.S. is closed today for the Independence Day holiday.
Weaker demand and rising inventories are likely to pull prices back toward $4,000 a ton in the current quarter, Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London, said in a report. “We expect prices to rebound in the fourth quarter toward $6,000 a ton,” he said.
Copper for immediate delivery will average $4,140 a ton this year, the bank said, rising to $5,000 next year.
Higher Inventories
Inventories of the metal in warehouses monitored by the LME rose 4,050 tons, or 1.5 percent, to 268,275 tons, according to daily exchange figures, halting a 40-day decline. Metal booked for delivery has declined to 4.6 percent of total LME stockpiles from 21 percent at the start of May.
Copper inventories held in LME-registered warehouses have shown a net increase in August in 24 of the past 25 years, London-based Nick Moore and other analysts at RBS Global Banking & Markets said in a report today.
“Inventory seasonality could be just the trigger to lower prices,” the analysts said, adding that consumers tend to run down inventories in the slower summer months.
Shanghai copper stockpiles increased by 6.9 percent this week, the Shanghai Futures Exchange said today. Inventories of the metal rose 3,892 metric tons to 59,980 tons.
Among other LME metals for three-month delivery, aluminum slid 2.4 percent to $1,601 a ton and nickel fell 2.1 percent to $16,100 a ton. Lead was unchanged at $1,700 a ton, zinc declined 1.1 percent to $1,555 a ton, and tin also was unchanged at $14,300 a ton.
