BLBG: Copper Falls as Stockpiles Fuel Concern Prices Climbed Too High
Copper fell in New York and London after two days of gains as swelling inventories fueled concern that this year’s rally lifted prices too high to reflect demand.
Stockpiles tallied by the London Metal Exchange expanded for a 15th day to 324,375 metric tons, the most since May 26. Inventories have increased 8.5 percent this month after rising 6.4 percent in August and 5.6 percent in July. In Shanghai, stockpiles rose 12 percent last week to 97,396 tons, the highest level since June 2007.
“The price should adjust to the high inventories and a looming oversupply,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said by phone. “We have had huge increases in stocks on the LME and in Shanghai, and there are probably undisclosed inventories in China as well.”
Futures for December delivery slid 2.95 cents, or 1 percent, to $2.907 a pound on the New York Mercantile Exchange’s Comex division at 9:12 a.m. local time, erasing a gain of as much as 0.6 percent. Copper for three-month delivery fell 0.6 percent to $6,380 a ton on the LME. The metal has doubled in 2009.
Builders in the U.S., the world’s second-biggest copper user after China, broke ground in August on the most houses in nine months, figures from the Commerce Department showed today in Washington. Construction uses 25 percent of world output of the metal, the Copper Development Association’s Web site shows.
Housing starts rose 1.5 percent to an annual rate of 598,000, the department said, matching expectations.
Confidence Survey
A survey of Bloomberg users on six continents showed that confidence in the world economy held at a record high in September after reports suggested the recession is over. The Bloomberg Professional Global Confidence Index rose to 58.54 from 58.12 in August. It exceeded 50 for a second month, which means there were more optimists than pessimists.
Record first-half imports into China helped copper’s surge this year. The State Reserve Bureau, which buys commodities on behalf of the government, is estimated to have purchased 230,000 tons of copper this year, and Chinese traders and fabricators have bought another 600,000 tons, David Martin, head of base- metals marketing at BHP Billiton Ltd., said yesterday.
Consumer and industrial demand in China will support growth in copper demand, Henry said at a presentation in London. Existing supply and expanded production will be insufficient to meet demand by 2020, he said, predicting a 10 million-ton supply shortfall. BHP is the world’s biggest mining company.
Among other LME metals for three-month delivery, zinc added 0.4 percent to $1,944 a ton. Nyrstar NV, the world’s largest producer of the metal, said it will resume zinc-oxide output at a Belgian smelter by the end of the month after a nine-month shutdown.
Aluminum gained 1.2 percent to $1,950 a ton, and nickel advanced 1.7 percent to $17,592 a ton. Tin fell 0.3 percent to $14,600 a ton, and lead declined 0.3 percent to $2,286.25 a ton.
