Metals News
Copper Declines in London as Stockpiles Expand, Dollar Rebounds
smm insight
Dec 7,2009

LONDON, Nov. 26 -- Copper fell from a 14-month high in London on speculation rising stockpiles and a rebound in the dollar signal slower demand for the metal.

    Inventories of copper in warehouses monitored by the London Metal Exchange rose 0.1 percent to 432,075 metric tons, the highest since April 23. The U.S. Dollar Index of the greenback against six currencies gained as much as 1 percent, making dollar-priced metals more expensive to holders of other monies.

    "Dollar strength and rising inventories put prices under pressure," Steve Hardcastle, an analyst at Sucden Financial Ltd. in London, said by phone.

    Copper for three-month delivery fell $164, or 2.3 percent, to $6,821 a ton on the LME, the largest drop compared with closing prices since Oct. 30. Prices earlier today rose to $7,060, the highest since September 2008.

    Copper for March delivery dropped 2.3 percent to $3.1235 a pound on the New York Mercantile Exchange's Comex division. Most U.S. markets are closed today for the Thanksgiving Day holiday.

    Expectations for a global economic rebound have helped copper to more than double this year, along with the dollar index's 8 percent slide and record first-half imports into China, the world's biggest consumer of copper.

    Declines in the dollar may continue to support demand for commodities, Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, said by phone. "My concern is whether some of the commodity markets are getting too far ahead of themselves in terms of the disconnect between the price recovery and the real improvement in end-user demand."

    LME Inventories

    LME inventories rose for 19 consecutive weeks. Canceled warrants, or metal due to be withdrawn from warehouses, total 1,950 tons, or less than 1 percent of the total, down from 21 percent in May.

    Dubai is shaking investor confidence after its proposal to delay debt payments, analyst Dan Smith at Standard Chartered Plc said by phone. The cost of protecting government notes from Abu Dhabi to Bahrain rose, extending the steepest increase since February as Dubai World, with $59 billion of liabilities, sought a "standstill" agreement from creditors. The proposal risked triggering the biggest sovereign default since 2001.

    "It is a big deal for the financial markets as a whole and it has resulted in some dollar strength," Smith said. "It is bearish for risky assets, including base metals."

    Also weighing on prices was a wage settlement in Peru at Cia. Minera Antamina SA, Sucden's Hardcastle said.

    Copper, Zinc Mine

    The operator of the world's largest combined copper and zinc mine avoided a strike after reaching a three-year wage accord with its workers, a labor union said today.

    Among other LME metals for three-month delivery, tin fell 0.5 percent to $14,975 a ton. The so-called backwardation, when metal for nearby delivery trades at a premium to the three-month price, was zero yesterday compared with $18 in the previous session, according to LME data. The premium climbed to $730, a five-year high, on Sept. 22. Stockpiles of tin in LME warehouses have more than tripled this year to 26,870 tons.

    Aluminum fell 1.9 percent to $2,009 a ton and zinc shed 2.3 percent to $2,256 a ton. Nickel dropped 2.5 percent to $16,575 a ton and lead fell 2.1 percent to $2,340 a ton.

    (Source: Bloomberg) 


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