BLBG: Copper Falls as Rally Seen Excessive Amid Seasonal Slowdown
By Glenys Sim
July 29 (Bloomberg) -- Copper declined in Asia as some investors deemed the metal’s advance to the highest level in almost 10 months as excessive amid a seasonal slowdown in China, the world’s largest user.
Inventories in London Metal Exchange warehouses in South Korea and Singapore, the closest ones to China, stood at 14,875 metric tons yesterday, more than 14 times this year’s low of 1,050 tons registered June 15. Copper also retreated alongside global equities.
“Equity and currency moves will continue to dictate short term moves, but growing expectations that China is now well stocked should start to trigger an overdue price correction,” Mark Pervan, head of commodity research at Australia and New Zealand Banking Group Ltd., wrote in an e-mail.
Three-month delivery copper on the London Metal Exchange fell 0.9 percent to $5,480 a ton at 11:15 a.m. in Singapore. Still, the metal is up 11 percent in this month, heading for the longest monthly rally since the eight-month winning streak ended January 2006. Copper for September delivery in New York was down 0.8 percent at $2.501 a pound.
November-delivery copper on the Shanghai Futures Exchange lost as much as 3.4 percent to 43,330 yuan ($6,343) a ton, before trading at 43,490 yuan.
U.S. stocks fell yesterday and the Standard & Poor’s 500 Index dropped from an eight-month high as consumer confidence trailed projections. The regional benchmark MSCI Asia Pacific Index declined for the first time in 12 days on concern the recent rally had overvalued earnings prospects.
‘Short Lived’
“Attractive SHFE/LME price differentials have diminished and the SRB has been sidelined for sometime,” said Pervan, referring to China’s State Reserve Bureau, whose purchasing earlier this year supported prices. “However, the downturn could be short-lived, with a pull-back in China restocking met by a seasonal fourth-quarter rebound in restocking elsewhere.”
Among other LME-traded metals, aluminum declined 0.4 percent to $1,816 a ton, and zinc was down 0.8 percent at $1,676 a ton. Lead gained 0.2 percent to $1,770 a ton, nickel was up 0.8 percent at $16,760 a ton, while tin was up 0.2 percent at $14,100 at 11:14 a.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
