Cop­per slides as funds sell and in­ven­to­ries rise; base met­als await China data

Business World - - WORLD MARKETS -

LON­DON — Cop­per prices slid on Tues­day as funds cut bets on higher prices, in­ven­to­ries in Lon­don Me­tal Ex­change (LME) ware­houses jumped and the dol­lar stead­ied at higher lev­els.

Bench­mark cop­per on the LME ended down 1.20% at $6,668 a ton, af­ter hit­ting a three-year high of $6,970 a ton last week.

Prices are up around 20% this year.

“The move from $ 6,000 to $7,000 in a month can­not be ex­plained by fun­da­men­tals, which haven’t changed and which at this time of the year are nor­mally, sea­son­ally weak,” said Julius Baer an­a­lyst Carsten Menke.

“Mine pro­duc­tion is re­cov­er­ing from dis­rup­tions ear­lier this year. Chile is re­port­ing a growth in out­put and the is­sues be­tween the In­done­sian govern­ment and Freeport seem to have been re­solved.”

LME data shows funds’ net long cop­per po­si­tion at 71,827 lots, or more than 1.80 mil­lion tons, is down from a peak of 78,527 lots late in Au­gust but still near its high­est since last De­cem­ber. Cop­per stocks in LME-ap­proved ware­houses rose 10,300 tons to 218,725 tons but re­main 40% be­low this year’s 354,650-ton peak.

Also pres­sur­ing met­als was a firmer US cur­rency, mak­ing dol­lar- de­nom­i­nated com­modi­ties more ex­pen­sive for hold­ers of other cur­ren­cies.

China’s im­ports of ma­jor com­modi­ties in Au­gust il­lus­trate both why prices have gained in re­cent months and why this rally may be run­ning out of steam.

Chile, the world’s largest cop­per pro­ducer, saw out­put rise to 473,544 in July, up more than 5% year on year. Its out­put ear­lier this year fell due to a strike at Es­con­dida, the world’s largest cop­per mine.

In­done­sia and Freeport- McMoRan reached an agree­ment late last month to al­low the US miner to ap­ply for a per­mit to keep op­er­at­ing its gi­ant Gras­berg cop­per and gold mine in the coun­try. Gras­berg is the world’s sec­ond-big­gest cop­per mine.

Base met­als mar­kets are wait­ing for China data on new loans, in­vest­ment and in­dus­trial pro­duc­tion due this week to dis­cern strength of de­mand ahead.

Alu­minum closed up 0.70% at $ 2,137 a ton, zinc fell 0.70% to $3,061, lead rose 1.50% to $2,312, tin slipped 0.40% to $20,675 and nickel climbed 2% to $11,990. —

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