Copper falls after its stockpiles jump the most in four years

Copper fell for a third day in London after stockpiles monitored by the London Metal Exchange jumped the most in more than four years fueling concerns demand for the metal is weak.

Copper inventories in warehouses tracked by the LME rose for an eighth session, climbing 9.5 per cent to 298,625 metric tons, the most since September 5, 2008, exchange data showed on Monday. Stockpiles are at the highest since February 28. Inventories tracked by the Shanghai Futures Exchange advanced for a second week, rising 7,406 tons to 205,385 tonnes, data from the bourse showed December 14.

Rising copper stockpiles “is the key reason for a weakness at the moment,” Angus Staines, an analyst at UBS AG in London, said by phone on Monday. Demand in China, the biggest buyer of the metal, won’t pick up until the Chinese New Year, he said.

Copper for delivery in three months declined 0.2 per cent to $8,051 a metric ton by 10:30 am on the London Metal Exchange. The contract gained 5.9 per cent this year. Copper for March delivery fell 0.4 per cent to $3.6695 a pound on the Comex in New York.

Money managers increased net-long positions, or wagers on rising copper prices, to 22,123 Comex futures and options contracts as of December 11, according to the US Commodity Futures Trading Commission.

That compared with net-long positions of 13,481 a week earlier.

A total of 17,725 tonnes of copper were delivered in LME warehouses in Antwerp, Belgium, while 7,550 tonnes arrived in New Orleans, LME data showed on Monday. Orders to withdraw copper from LME-monitored warehouses climbed 16 percent to 44,425 tons on bookings of 6,225 tons in South Korea.

Chinese Demand
Declines on the LME may be limited on expectations China’s plan to boost urbanization will bolster demand from the biggest consumer of the metal. Leaders vowed to target “sustained and healthy development” next year by maintaining a “prudent” monetary policy and a “proactive” fiscal policy as they concluded a two-day central economic work conference in yesterday, the official Xinhua News Agency reported.

The fee to borrow copper for one day jumped to $7 a ton on the LME, the highest since Sept. 18. One party held as much as 79 percent of copper stockpiles plus open positions expiring in three days as of Dec. 12, exchange data showed Dec. 14. Another party held as much as 39 percent of the positions, according to the Warrant Tom Banding Report.

Dec. 19 will be this month’s third Wednesday, the so-called prompt date when LME rules oblige holders of contracts to advise sellers how they wish to settle the positions.

Aluminum, zinc, lead and nickel fell and tin rose in London.