Copper Drops as Growing China Stockpiles Spur Demand Concerns

BEIJING, Aug. 25 -- Copper declined on concern that demand for the metal from China may slow as domestic inventories continue to expand.

    Chinese inventories, already at the highest level in two years, are expected to expand further this week, said Wu Tianmin, analyst at BOC International (China) Ltd. Stockpiles of copper in Shanghai warehouses rose 5,543 metric tons, or 7.3 percent, to 81,650 tons last week, according to Shanghai Futures Exchange data.

    "Inventories are expanding and end-user demand is nothing spectacular," Wu said. "The fundamentals in the copper market are not sufficient to support a sustained rally."

    Three-month delivery copper on the London Metal Exchange fell as much as 1.5 percent to $6,328 a metric ton and last traded at $6,365 a ton at 11:12 a.m. in Singapore.

    Copper for December delivery on the Shanghai Futures Exchange climbed 0.3 percent to 49,400 yuan ($7,231) a ton at the same time.

    Refined copper imports by China, the world's largest consumer of the metal, dropped by 23 percent in July from a record the previous month after domestic stockpiles expanded and scrap supplies increased.

    "We expect the imports to drop further in August," Wu said. Preliminary data is typically released in the first 10 days of the month. Imports decreased to 292,226 metric tons in July, the Beijing-based customs office said yesterday, citing revised final data. Imports were a record 378,943 tons in June, according to Bloomberg data.

    Among other LME-traded metals, aluminum lost 0.3 percent to $1,922 a ton, zinc slipped 0.3 percent to $1,850 a ton, lead dropped 2 percent to $1,985 a ton and nickel declined 1.3 percent to $19,350 a ton.

    (Source: Bloomberg)