Copper Falls Most in Three Weeks as Record Prices Curb Demand

Feb. 15 (Bloomberg) --Copper fell the most in three weeks on speculation that record prices will slow demand, resulting in increased stockpiles.

Inventories in warehouses monitored by the London Metal Exchange are up 6.6 percent this year. Supplies in Shanghai were at the highest level since June, figures showed last week.

"Stockpiles are bound to jump at these prices,” said David Thurtell, an analyst at Citigroup Inc. in London.

Copper futures for May delivery fell 9.15 cents, or 2 percent, to close at $4.546 a pound at 1:21 p.m. on the Comex in New York, the biggest decline for a most-active contract since Jan. 25. Earlier, the price reached $4.6575, the highest ever.

Some base metals such as copper "are close to their cyclical peaks and positioning is generally long and stretched, making them particularly vulnerable,” Citigroup analysts including Thurtell said today in a report.

Hedge funds and money managers boosted their bullish bets on copper by 14 percent in the week ended Feb. 8, the most in two months, U.S. Commodity Futures Trading Commission data showed last week. Net-long positions were at 36,590 contracts, just 2,515 contracts below the record level at the end of last year.

On the London Metal Exchange, copper for three-month delivery dropped $149, or 1.5 percent, to $10,011 a metric ton ($4.52 a pound). Earlier, the metal touched a record $10,190.

As much as 1 million tons of unreported refined-copper stockpiles in China could re-enter the market at "handsome” price levels of above $10,000, Nick Moore and Daniel Major, London-based analysts at RBS Global Banking and Markets, said in a report on Feb. 11.

Copper stockpiles monitored by the LME rose by 650 tons, or 0.2 percent, to 402,425 tons, daily exchange figures show. Inventories are at the highest level since Aug. 25.

Aluminum, nickel, zinc and lead all fell in London. Tin rose.