Copper May Decline as Growing Stockpiles Outweigh Dollar Drop

SINGAPORE, Sept. 23 -- Copper, little changed in Shanghai trading, may decline for a second day as concerns about inventory growth and declining imports by China outweighed a drop in the dollar and a rally in global equities.

    Copper stockpiles in Shanghai expanded for an eighth week last week to a five-year high of 104,248 metric tons. The country's imports of the refined metal dropped to 219,731 tons in August, compared with 292,226 tons in July, customs office data showed yesterday.

    "As the record levels of imports in the first half of the year start surfacing as reported stockpiles, it brings the fundamentals back into the front of investors' minds," Yuan Fang, a trader Shanghai East Asia Futures Co., said today.

    The December-delivery contract on the Shanghai Futures Exchange was little changed at 48,720 yuan ($7,137) after rising to 48,980 yuan earlier.

    Three-month delivery copper was little changed at $6,265 a ton on the London Metal Exchange at 9:50 a.m. in Singapore. December-delivery copper in New York slipped 0.4 percent to $2.8535 a pound.

    The Dollar Index, which gauges the strength of the greenback against six major currencies, dropped as low as 75.939, the weakest since Sept. 22, 2008, while the MSCI Asia Pacific Index of equities added 0.5 percent, gaining for a second day.

    China Imports

    China's copper imports "could fall considerably" from current levels, making the metal "especially vulnerable" among commodities in terms of exposure to slower import demand from the Asian nation, Barclays Capital said.

    "Although the fall in refined copper imports has so far been less severe than market expectations, we highlight the risk of potential for a bigger pull back over the rest of the year," the bank said in a report yesterday. "Our numbers suggest a possible halving in imports."

    Among other LME-traded metals, aluminum added 0.6 percent to $1,900 a ton and nickel gained 0.3 percent to $17,800 a ton. Lead declined 0.2 percent to $2,285 a ton and tin gained 0.2 percent to $14,726 a ton. Zinc fell 0.9 percent to $1,928 a ton as of 10:02 a.m. in Singapore.

    (Source: Bloomberg)