Copper Falls as Rising Inventories May Signal Drop in Demand

LONDON, Sept. 24 -- Copper prices fell for the first time in three sessions as inventories rose to a four-month high, renewing concern that demand is easing.

    Copper stockpiles in warehouses monitored by the London Metal Exchange increased 175 metric tons to 331,950 metric tons, the most since May 22. LME supplies gained for 17 straight sessions before slipping yesterday. Prices have dropped for three consecutive weeks on signs that copper use may falter.

    "The rise in inventories has gotten people worried," said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. "There's some fear about a slowdown in demand."

    Copper for December delivery slid 5.65 cents, or 2 percent, to $2.808 a pound on the New York Mercantile Exchange's Comex division. On the LME, the metal for three-month delivery fell $142, or 2.3 percent, to $6,128 a ton ($2.78 a pound.)

    A stronger dollar also curbed demand for futures as a hedge against inflation, Cohen said. The U.S. currency advanced as much as 0.4 percent against the euro after touching a one-year low earlier in the session.

    "The dollar has gotten so oversold lately that people are worried we could get a strong bounce now," Cohen said. He said that would push down commodity prices.

    Refined copper imported into China dropped to 219,731 tons last month, according to data released yesterday by the nation's customs office. The amount more than doubled from a year earlier.

    "Rising exchange inventories and slower Chinese imports of refined metal have capped the market in the short term," Robin Bhar, an analyst at Credit Agricole SA's Calyon unit in London, said in a report dated yesterday. Record shipments into China in the first half of this year contributed to a doubling of futures prices by August.

    Among other LME metals for three-month delivery, nickel rose, while aluminum, tin, lead and zinc fell.

    (Source: Bloomberg)