Copper Declines a Third Day in Asia as Global Stockpiles Expand

LONDON, July 6 -- Copper dropped for a third day in Asia, trading below $5,000 a metric ton as rising global inventories signaled demand may be waning for the metal used in construction and automobiles.

    Stockpiles of copper tallied by the London Metal Exchange increased on July 3 for the first time in two months, expanding 1.5 percent to 268,275 metric tons. Inventories of the metal in Shanghai warehouses also gained 6.9 percent to 59,980 tons last week, the Shanghai Futures Exchange said in a report after the market closed July 3.

    "Supporting the view that the Chinese fundamentals have softened moderately is the fact that copper premiums into China, which are typically a good indicator of demand, have fallen to $70 a ton from $280 a ton in early April," Macquarie Bank Ltd. analysts led by Jim Lennon, said in a report dated today.

    Three-month delivery copper on the London Metal Exchange dropped as much as 0.8 percent to $4,940 a ton and traded at $4,941 at 10:03 a.m. in Singapore. Copper for September delivery in New York lost as much as 2.7 percent to $2.2440 a pound.

    October-delivery copper on the Shanghai Futures Exchange slid as much as 1.6 percent to 39,130 yuan ($5,727) a ton, before trading at 39,300 yuan.

    Copper has surged 61 percent this year on speculation that demand in China, the world's largest user, will offset declining consumption in the rest of the world. Chinese imports of the metal climbed to record levels for a fourth month in May as a positive arbitrage between the London and Shanghai markets, which has now reversed, encouraged purchases.

    "Traders will lose about $100 a ton for copper imported into China compared with receiving a $300 a ton of profit in early 2009," said Lennon. "This development points to a slowing in Chinese imports in July and August and a reduction in the downward pressure on LME stockpiles over this period."

    Among other LME-traded metals, aluminum gained 0.5 percent to $1,609 a ton and zinc climbed 0.6 percent to $1,560 a ton. Nickel lost 0.7 percent to $16,100 a ton, while lead and tin hadn't traded as of 10:03 a.m. in Singapore.

    (Source: Bloomberg)