LONDON

Copper dips on demand concerns
Michael Taylor
RTGAM

LONDON - Copper fell more than 3 per cent on Monday, as suspicions grew that much of the material heading for China would be stockpiled, reinforcing worries about demand prospects.


By 1057 GMT, copper for three month delivery on the London Metal Exchange fell to $3,625 (U.S.) a tonne from $3,723 at the close on Friday and compared with a session low at $3,600.

"People are suspecting that even though material is going into China, this may be more to do with State Reserves Bureau and stockpiling rather than strong evidence for a pickup in underlying demand," Stephen Briggs, analyst at RBS Global Banking & Markets, said.

Copper stocks in LME warehouses fell 3,325 tonnes to 518,700, continuing the past week's trend.

The level of cancelled warrants - metal tagged to leave LME stores - fell to 10 per cent of total stocks, from 12 per cent on Thursday. Cancelled warrants were 54,100 on Monday.

"Everyone was getting terribly excited about cancelled warrants then two days of the cancelled warrants declining and no real significant change today," Mr. Briggs said.

"Suddenly, cancelled warrants declines suggest a possibility that there was a little bit of gamesmanship going on."

Copper used in power and construction rose about 8 per cent last week.

An unexpected rise in Shanghai stocks last week, up more than 10,000 tonnes to 38,468 tonnes or more than a third has worried the market.

"There is too much hope being placed in Chinese refined copper imports," Gary Mead, senior commodities analyst at Virtual Metals, said.


He said recent buying by the SRB was misleading and only resulted in moving a copper surplus from one part of the world to another.


"Is this copper actually being used or put into warehouses - my suspicion at the moment is that it is being put into warehouses," Mr. Mead added. "I can't see this is a long-term basis for an improved copper price ... The macro economic data from just about everywhere, is awful."


Investors are trimming their exposure. The net long position in U.S. commodities fell nearly a third over the last fortnight, data released on Friday showed.

But analysts warned about reading too much into the data and are looking ahead to Chinese import data later this week.

Other metals ticked lower. Aluminum fell to a low of $1,302 but was unchanged at $1,310.

LME aluminum stocks jumped 6,100 tonnes to a record 3.27 million tonnes - a reminder of weaker demand for the metal used in packaging and transport.


Nickel was at $9,750 from $9,850 at the close on Friday, lead at $1,230 from $1,215 and zinc at $1,218 from $1,230. Tin drifted $170 lower to $11,150.