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Copper Drops to One-Week Low in Shanghai on Poor Demand Signs

Metal Plants Shut in New Lead Scare

SHANGHAI, Aug. 19 -- Copper in Shanghai slumped to the lowest in more than a week on signs recent gains aren't justified by demand and supply prospects.
&nbsp;&nbsp;&nbsp; Copper inventories in Shanghai jumped to the highest in two years last week while London exchange-monitored stockpiles expanded 10 percent in the past month. The premium for immediate delivery over futures has almost disappeared in Shanghai, from a few thousand yuan earlier in the year, after supplies swelled, said Guojin Futures Co. analyst Ni Yaoxiang.
&nbsp;&nbsp;&nbsp; &quot;Investors' views are diverging,&quot; Ni said from Shanghai. &quot;Some start going back to fundamentals, deeming a liquidity- driven rally is overdone.&quot;
&nbsp;&nbsp;&nbsp; December-delivery copper on the Shanghai Futures Exchange fell as much as 2.7 percent to 46,810 yuan ($6,850) a ton, the lowest since Aug. 7, before trading at 47,050 yuan.
&nbsp;&nbsp;&nbsp; Three-month delivery copper on the London Metal Exchange slid 0.7 percent to $6,037 a ton at 11:52 a.m. in Shanghai.
&nbsp;&nbsp;&nbsp; Copper gained earlier after a rebound in U.S. stocks helped global equities recover from the steepest decline since April, boosting demand prospects for industrial metals.
&nbsp;&nbsp;&nbsp; The MSCI World Index of stocks added as much as 0.2 percent after advancing 1.1 percent yesterday. China's stocks fluctuated, with the benchmark Shanghai Composite Index slipping 0.4 percent at midday. Copper, a barometer of economic growth, is used in homes, automobiles and power grids.
&nbsp;&nbsp;&nbsp; &quot;A global economic recovery is still the main theme,&quot; Lai Qiwen, an analyst at Guantong Futures Co. said from Beijing. &quot;Any correction won't go very deep for now.&quot;
&nbsp;&nbsp;&nbsp; Among other LME-traded metals, aluminum and zinc were little changed at $2,004 a ton and $1,797 a ton respectively. Lead fell 0.2 percent to $1,806.75 a ton, nickel added 1.2 percent to $19,030 a ton and tin gained 1.1 percent to $14,000 a ton.
&nbsp;&nbsp;&nbsp; (Source: Bloomberg)
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