Copper fell for a second day in London on speculation that expanding stockpiles of the metal in China, the world’s biggest consumer, indicate slowing demand as the Lunar New Year holiday approaches. Inventories monitored by the Shanghai Futures Exchange climbed for a third week to a seven-month high, exchange figures showed today. The week-long holiday begins Feb. 2. Prices also slid, paring a weekly gain, as China raised the reserve requirement ratio for local banks. “The Chinese are winding down ahead of the New Year holiday, so are in the back seat and as a result the markets are drifting,” said Leon Westgate, an analyst at Standard Bank Plc in London. Higher stockpiles are “indicative of the lack of Chinese interest at the moment,” he said. Copper for delivery in three months dropped $70, or 0.7 percent, to $9,545 a metric ton at 10:12 a.m. on the London Metal Exchange. Copper for delivery in March fell 0.6 percent to $4.352 a pound on the Comex in New York. All of the six main metals traded on the LME retreated. Inventories of copper climbed 481 tons to 132,647 tons based on a survey of eight warehouses in Shanghai, the Chinese exchange said on its website. That was the highest level since the week ended June 18, according to Bloomberg data. Arbitrage Trading “China is not providing any support for copper prices at the moment,” said Jesper Dannesboe, a strategist at Societe Generale SA in London. The increase in stockpiles “is consistent with the fact that the arbitrage is firmly closed and has been for quite some time,” he said. Arbitrage traders try to profit by buying the metal in London and selling it in Shanghai, exploiting price differences between the markets. The reserve requirement ratio will climb 0.5 percentage point as of Jan. 20, according to a statement posted to the website of China’s central bank today. The country is moving to curb lending and liquidity as inflation runs at the fastest pace in more than two years. The central bank raised interest rates on Christmas Day. Copper premiums in Europe are falling as physical trading slows in January amid high prices, Chinese inactivity and rising stocks, Metal Bulletin reported yesterday. Premiums fell to between $70 and $100 a ton on Jan. 12 from $70 to $110, it reported. ‘Moribund’ Market “Metals are lacking direction and momentum and trading very technically,” Standard Bank’s Westgate said. “In the background, the physical market is essentially moribund.” Still, Chinese demand for copper will continue to rise, keeping market conditions for the metal “quite tight,” Diego Hernandez, chief executive officer of Codelco, said yesterday. The Santiago-based company is the world’s biggest producer of the metal. Codelco’s Andina mine in Chile may return to normal processing levels today after a fire broke out at its plant yesterday. LME copper stockpiles slipped 0.3 percent to 376,225 tons today, daily exchange figures showed. Orders to draw copper from inventories, or canceled warrants, fell 2.7 percent to 32,650 tons. Aluminum for three-month delivery on the LME fell 0.4 percent to $2,474.25 a ton. Stockpiles of the lightweight metal fell to 434,020 tons, the lowest level in more than eight months, based on a survey of 18 warehouses in Shanghai, Guangdong, Jiangsu and Zhejiang provinces. Tin fell 0.2 percent to $26,790 a ton and nickel slid 0.8 percent to $25,340 a ton. Lead declined 0.6 percent to $2,620 a ton and zinc dropped 1.2 percent to $2,433 a ton.

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