Copper dips as increasing inventories offset tentative pickup in demand

LONDON — Copper edged down on Tuesday, drifting back towards last week’s two-month low as a rise in inventories offset signs of a modest pickup in buying.

Physical copper traders said demand was marginally increasing as the summer lull came to an end, though volumes remained muted. Inventories in London Metal Exchange ( LME) warehouses rose further though, keeping the market under pressure.

LME copper stocks jumped 6,450 tons to 334,975 tons, the latest data showed, the highest in almost a year.

“Copper is still underperforming, and it’s still the worst performing metal this year,” Citi Analyst David Wilson said.

“The LME build is slightly concerning, though that does seem to have been priced to a certain extent. We don’t know how much more there is to come.”

Three-month copper on LME closed at $ 4,620 a ton, down 0.10%, after ending the previous day little changed. LME copper is holding just above support at $4,600, a nine-week low touched last week.

INTEREST ‘LACKLUSTER’

Investment interest was lackluster, with the total net long position of funds trading copper on the LME falling to 18,033 lots on Friday from 27,026 lots the previous week, according to the LME’s Commitments of Traders report.

That came after data from the US Commodity Futures Trading Commission showed on Friday that speculators sharply increased their net short position in copper futures and options.

“In copper, the speculative community continued to increase their net short position to largest levels since June 2016 with prices losing ground over the week,” Deutsche Bank said in a note.

But traders in Europe and Asia reported a marginal rise in copper demand, which has been soft in recent months.

“Feedback from fabricators onshore points to a pickup in orders from the construction sector in recent weeks,” Standard Chartered said in a report.

Also potentially supporting copper prices, striking workers at Codelco’s small Salvador copper deposit in Chile have blocked access to the mine and are affecting production, the company and union said on Monday.

LME nickel closed up 0.40% at $10,110 a ton, while LME tin ended 0.30% higher at $19,450.

LME aluminum closed up 0.60% at $1,589 a ton, and LME lead ended 0.20% higher at $1,946.50 a ton. LME zinc closed down 1.80% at $2,321 a ton. —