Copper Drops in Shanghai on Inventory Growth, Stimulus Outlook

SINGAPORE, Nov. 2 -- Copper fell in Shanghai after stockpiles increased and better-than-estimated manufacturing data in China raised speculation stimulus measures may be pared in the coming months.

    Inventories of copper at Shanghai warehouses expanded 7.2 percent to 102,835 tons last week. Stockpiles of the metal are now nearly six times the level at the start of the year.

    "Stockpiles growth will always give the bears an opportunity to take prices lower," Liu Biyuan, an analyst at GF Futures Co., said from Guangzhou today.

    January-delivery copper on the Shanghai Futures Exchange lost as much as 2.1 percent to 50,150 yuan ($7,344) a metric ton, and traded at 50,360 yuan at 9:58 a.m. Singapore time.

    Premiums paid by Chinese importers, typically a good indicator of demand, have been hovering around $70 a ton over the LME cash price in the past month, a sign consumers are buying hand-to-mouth, according to Everbright Futures Co. trader Wang Zheng. This compares with this year's peak of $280 in April.

    Asian equities tracked a global slump after U.S. commercial lender CIT Group Inc. filed for bankruptcy and as spending by American consumers fell for the first time in five months. The MSCI Asia Pacific Index dropped 1.8 percent.

    "The markets have been holding up well because of the various stimulus packages around the world," said GF Futures' Liu. Still, "some investors are beginning to doubt the sustainability of the recovery if some of those measures are being taken away."

    LME Copper

    Copper for delivery in three months on the London Metal Exchange was little changed at $6,500 a ton at 10:04 a.m. in Singapore, after tumbling as much as 3 percent on Oct. 30.

    China's Purchasing Managers' Index rose to a seasonally adjusted 55.2, the highest level in 18 months, the Federation of Logistics and Purchasing said yesterday in an e-mailed statement. This is higher than the media estimate of 54.7 in a Bloomberg News survey of 10 economists. A reading above 50 indicates an expansion.

    Among other LME-traded metals, aluminum rose 0.3 percent to $1,913 a ton, zinc gained 0.7 percent to $2,175 a ton and lead was little changed at $2,310 a ton. Nickel fell 0.8 percent to $18,100 a ton, while tin hadn't traded as of 10:11 a.m. in Singapore.

    (Source: Bloomberg)