China and US copper demand slows: so stock up, prices ease
COPPER prices have fallen for the second time in three days as rising inventories of the metal signal slowing demand in China and the US, the world’s two biggest users.
Inventories monitored by the London Metal Exchange have jumped 13 per cent this month and have reached the highest level since March 17. China reported this month that its copper imports dropped 19 per cent in the first quarter from a year ago. The price has dropped 12 per cent from a May 5 record.
Copper futures for July delivery fell 3.35 cents, or 0.9 per cent, to $3.743 a pound on the Comex division of the New York Mercantile Exchange. Inventories monitored by LME gained 2,300 tonnes, or 1.9 per cent, to 124,950 tonnes, the exchange reported. The stockpiles are still 11 per cent smaller than a year ago.
Copper also fell on concern that rising energy prices will damp the global economy and reduce demand for metals, traders said.
‘‘ There’s growing concern about these oil prices and their potential to stifle the economy,’’ said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey.
Copper had jumped 24 per cent in 2008, partly boosted by speculation that supplies may fall short of consumption and that a declining dollar would spur demand for commodities. The dollar fell as much as 0.6 per cent against a weighted basket of the euro, yen and four other major currencies. The gauge has dropped 5.6 per cent this year, helping to spur a jump in copper prices as traders seek a store of value.
‘‘ A weaker dollar helps cushion the selling, but rising LME stocks and lingering softness in nearby spot Chinese premiums are causing rallies to run out of steam,’’ said one trader.
World usage of the metal was steady in the first two months of the year, according to the Lisbon-based International Copper Study Group. On the London Metal Exchange, copper for delivery in three months fell $75, or 0.9 per cent, to $8,250 a tonne. Bloomberg
Copper: Demand is slowing