Shanghai Copper Falls for First Day in Four on Stockpile Gains

By Feiwen Rong

Aug. 25 (Bloomberg) -- Shanghai copper fell for the first time in four days after a jump in global stockpiles damped investor confidence in a rebound in Asian demand.

Inventories monitored by the London Metal Exchange jumped 4.6 percent to 163,800 metric tons on Aug. 22, the biggest one- day gain since May 9 and the highest total since Feb. 11. Copper, used in plumbing and electrical wiring, dropped 2.5 percent in London that day, trimming its gains for the week to 4.1 percent.

``Shanghai copper came under pressure because of the increase in London stockpiles,'' Li Ling, analyst at Minmetal StarFutures Co., said by phone from Shanghai today. ``It also seemed quite directionless today with the absence of London trading'' for the summer bank holiday there, he said.

Copper for November delivery fell as much as 880 yuan, or 1.5 percent, to 59,400 yuan ($8,681) a ton on the Shanghai Futures Exchange. The most-active contract ended the day at 59,740 yuan.

The metal also fell on a stronger dollar. The U.S. currency rose for the second day against the euro on speculation declining oil prices will support growth in the world's largest economy and energy consumer.

Copper consumption in China, the world's largest user of the metal, is expected to increase as the country resumes work at factories and infrastructure projects that were shut or slowed during the Olympic Games, which ended yesterday.

``The physical market maintained a premium over the futures prices, Minmetal's Li said. ``Demand isn't weak.''

Among other base metals futures traded in Shanghai, aluminum slipped 0.9 percent to close at 18,035 yuan a ton and zinc ended down 2.4 percent at 14,190 yuan.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net