BLBG: Copper Declines on Concern Stockpiles May Signal Weaker Demand
By Anna Stablum and Millie Munshi
March 22 (Bloomberg) -- Copper fell for a third day on concern that stockpiles at a seven-year high in China may signal weakening demand even as imports to the Asian nation rise.
Warehouse inventories tallied by the Shanghai Futures Exchange rose 8.8 percent last week to the largest amount since at least 2003, figures released on March 19 showed. Shipments of refined copper into China, the world’s largest user of the metal, increased 12 percent last month to 220,530 metric tons, compared with January, according to a government report today.
“It is a concern, because people at some point should be asking themselves if these imports are for real or if they are for stockpiling,” Eugen Weinberg, a Commerzbank AG analyst in Frankfurt, said today by telephone. “Demand for copper in China isn’t as strong as the data shows.”
Copper futures for May delivery slid 2.8 cents, or 0.8 percent, to $3.3445 a pound at 11:21 a.m. on the Comex in New York. The metal dropped 1.3 percent in the previous two sessions.
Inventories monitored by the Shanghai exchange increased to about 169,100 tons last week from a week earlier. Stockpiles have surged 77 percent this year.
Prices also fell today on concern that central banks will push up borrowing costs, stifling economic growth. On March 19, the Reserve Bank of India raised interest rates for the first time in almost two years. China, where inflation reached the highest rate in 16 months in February, also may make credit more expensive, traders said.
Monetary-Policy Outlook
“The fact that China may tighten and India is already tightening is weighing heavily,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. Copper also fell as the dollar strengthened, he said.
The greenback climbed as much as 0.5 percent against the euro before paring gains. The U.S. currency strengthened on speculation that Europe’s inability to solve Greece’s fiscal crisis will curb expansion.
“Greece is still a big factor,” Cohen said. “You have all these concerns of debt and interest rates coming together and adding fuel to the fire for strength in the dollar and lower commodities.”
On the London Metal Exchange, copper for delivery in three months fell $72.75, or 1 percent, to $7,362.25 a ton ($3.34 a pound). Aluminum, nickel, zinc, lead and tin also fell.
To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net. Millie Munshi in New York at mmunshi@bloomberg.net.
