NEW YORK, Feb 16, 2011 (Dow Jones Commodities News via Comtex) -- Copper futures fell to their lowest point in two weeks Wednesday as inventory builds undercut some of the view that copper supply won't be enough to cover demand this year.
The most actively traded contract, for March delivery, fell 6.6 cents, or 1.5%, to settle at $4.47 a pound on the Comex division of the New York Mercantile Exchange. That was its lowest finish since Feb. 1.
"The stock situation is an impediment for the market to go higher," said Stephen Platt, an analyst with Archer Financial Services in Chicago. "That's helping to limit the level of investment demand"
Much of the price pressure came as inventories of copper stored in London Metal Exchange warehouses rose 3,375 metric tons Wednesday, leaving them at 405,800. The most recent Comex inventory data, released late Tuesday afternoon, had inventories up 349 short tons at 77,450 short tons.
"We suspect the rise in LME stocks is likely behind today's selling, as it does not sit well with the prevailing view that we are in store for another massive deficit this year," MF Global analyst Edward Meir said in a note to clients.
Analysts are forecasting a copper-market deficit of between 90,000 and 825,000 tons this year as recovering economies eat up more of the industrial metal and mine supplies remain constrained.
That view, and a recovering appetite for riskier assets like industrial commodities and equities, helped send the metal to an intraday record of $4.6495 Tuesday before it began to sell off as traders booked profits.
Inflation data from the U.K. and China also helped pressure prices Tuesday by stoking worries about monetary tightening that could ultimately crimp some demand for copper.
That continued to keep some pressure on copper Wednesday, said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago.
These worries overshadowed copper-positive news that U.S. home construction rose to the highest level since September last month. The metal is widely used for piping in houses.
Construction of homes and apartments rose 14.6% from a month earlier, much more than economists' expectations for a 0.2% rise.
Although new building permits, a gauge of future construction, fell 10.4% to an annual rate of 562,000, it was less of a drop than expected.
Copper settlements (ranges include electronic and pit trading):
Mar $4.4700; down 6.60 cents; Range $4.4615-$4.5490
May $4.4825; down 6.35 cents; Range $4.4750-$4.5585