BLBG : Copper Declines in London as Stockpiles Expand, Demand Weakens
Aug. 17 (Bloomberg) -- Copper fell for a second day in London, leading declines in industrial metals, as stockpiles expanded and on concern that the doubling in prices since January no longer reflected the outlook for demand.
Inventories monitored by the London Metal Exchange gained 11 percent in a month, increasing another 0.4 percent today. Foreign direct investment in China, the biggest copper user, fell for a 10th month in July. U.S. consumer confidence unexpectedly declined this month, data on Aug. 14 showed.
“Base metal prices are overshooting fundamentally justified levels,” Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich, said in a report today. “Investors who think about buying base metals should wait for a better opportunity.”
Copper for three-month delivery fell $212, or 3.4 percent, to $6,033 a metric ton as of 9:25 a.m. on the LME. Prices reached $6,480 on Aug. 14, the highest since Oct. 1. Copper for December delivery slid 3.6 percent to $2.7490 a pound on the New York Mercantile Exchange’s Comex unit.
The LMEX index of six metals traded on the LME advanced for five consecutive weeks, the second time it’s done that this year. The gauge gained 70 percent this year, rebounding from a 49 percent slump last year.
China’s July imports of copper shrank 15 percent from a month earlier, according to the Beijing-based customs office.
Commodity Imports
The Asian nation’s second-half commodity imports should weaken in the second half of the year, Ben Simpfendorfer of Royal Bank of Scotland Group Plc said in a report.
“Nonetheless, the risks to base metal prices are limited as the market consensus is already pricing in weaker imports,” Simpfendorfer said. “We prefer copper and zinc to aluminum and nickel on supply-side constraints.”
Among other LME metals for three-month delivery, nickel fell 5.4 percent to $18,510 a ton, aluminum slid 2.5 percent to $1,940 a ton, and tin dropped 2.4 percent to $14,150 a ton. Lead fell 3.1 percent to $1,795 a ton and zinc declined 2.5 percent to $1,779 a ton.
