Copper May Drop on Speculation China Buying Less, Survey Shows

WASHINGTON, July 31 -- Zinc and lead are both seeing mounting buildups in London Metal Exchange warehouses lately, said analysts from UK-based Barclays Capital, adding there are likely more inventory add-ons to come, which could derail the base metal's recent price rally. Zinc stocks swelled by another 15,000 mt, on the heels of an 8,000 mt increase earlier in the week.
&nbsp;&nbsp;&nbsp; LME lead stocks grew by 3,900 mt this week. &quot;We are concerned that this may reflect additional metal coming from restarts to a market where demand is still weak,&quot; the analysts said in a report, &quot;and we suspect that more metal will be delivered on exchange.&quot;
&nbsp;&nbsp;&nbsp; Barclays had predicted last month that zinc's price coup could have a downside, with China alone reportedly refiring 500,000 to 600,000 mt of idled capacity. &quot;What we've seen for all of the base metals, not just zinc, is this very strong increase in prices, and there is the danger that it will encourage production restarts,&quot; Barclays analyst Gayle Berry told Platts in June.
&nbsp;&nbsp;&nbsp; The recent builds in zinc stocks may already be pressuring the price, with zinc at $/1,693.50 Thursday after breaking through the $1,700/mt level last week. Lead was trading at $1,795/mt Thursday.
&nbsp;&nbsp;&nbsp; (Source: Platts) 
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