Copper Drops in Asia on Speculation China May Be Oversupplied

SHANGHAI, June 15 -- Copper declined in Asia on speculation supply may outpace demand in China, the world's largest consumer, after the country's imports climbed to record levels for the fourth month and domestic stockpiles jumped to the highest in nearly 15 months.

    Inventories of copper in Shanghai warehouses grew for a second week to 60,647 metric tons last week, the highest since the week of March 20, 2008, the exchange said after the market closed June 12. China's imports of the metal and its products increased 6 percent in May from April to 422,666 tons.

    "The large increase in Shanghai copper inventories, driven by another month of increased imports, is raising concern that the domestic market may be oversupplied," said Zeng Chao, an analyst at Everbright Futures Co.

    Three-month delivery copper on the London Metal Exchange declined 1.6 percent to $5,153 a metric ton at 11:04 a.m. Singapore time. The metal reached an eight-month high of $5,388 a ton on June 11.

    September-delivery copper on the Shanghai Futures Exchange dropped as much as 2.8 percent to 40,200 yuan ($5,881) a ton, before trading at 40,360 yuan. Copper for September delivery in New York fell 1.5 percent to $2.3580 a pound.

    "The international markets are also being affected by the dollar's rebound, and this in turn weighs on Shanghai prices," said Zeng.

    The Dollar Index, which tracks the greenback against six major trading partners, gained a second day after Russian Finance Minister Alexei Kudrin said the dollar is in "good shape." The dollar rose to $1.3973 per euro, from $1.4016 in New York on June 12, after Britain's Telegraph newspaper cited Germany's top industrial group as saying that credit conditions in Europe's largest economy are worsening.

    Among other LME-traded metals, aluminum was down 0.7 percent at $1,633 a ton, zinc fell 3 percent to $1,640 a ton, lead slid 1.1 percent to $1,766 a ton and nickel lost 2.5 percent to $15,300 a ton. Tin hadn't traded as of 9:53 a.m. in Singapore.

    (Source: Bloomberg)