By Claudia Carpenter
Sept. 11 (Bloomberg) -- Aluminum fell in London as rising stockpiles indicated weakening demand because of a global oversupply of the metal. Copper erased an earlier decline.
Inventories of aluminum in warehouses monitored by the London Metal Exchange jumped 14,250 metric tons, or 1.2 percent, to 1.18 million tons, the highest since April 2004, according to the exchange's daily warehouse report. Supplies will outpace demand through next year, according to Triland Metals Ltd., one of 12 companies that trade on the LME floor.
``I find it very hard to come up with a big deficit next year,'' said Michael Widmer, an analyst at Lehman Brothers Holdings Ltd. in London. ``You would need to create a shortage of aluminum by closing down a lot of capacity and demand is relatively weak at the moment.''
Aluminum for delivery in three months dropped $24 to $2,602 a ton as of 1:52 p.m. local time on the LME. Copper jumped $72 to $6,912 a ton after earlier falling as much as $40.
Producers of aluminum will cut the fee they charge buyers in Japan, Asia's biggest importer, by as much as 14 percent, the biggest drop in five years, as a slump in home and car sales slows demand. The premium will be $75 to $77 a ton on the LME cash price for the three months to Dec. 31, down from $87 in the current quarter, according to four executives involved in the talks. The drop is the first in a year.
Worst Month
September has been the worst month for aluminum prices since 1987, with the biggest gains in December, Credit Suisse said in a report today. Prices may rebound to $3,000 by the end of the year, according to the report.
Copper in London dropped 12 percent in the past two months, almost three times the decline in prices in Shanghai, leading to speculation of increased metal imports in China, the world's largest buyer of the metal.
``The copper market is weaker than a year ago,'' Widmer said. ``You have got a little bit of a rebound in part because of expectations Chinese buyers will have to come back in the market.''
Freeport McMoRan Copper & Gold Inc., the world's second- largest copper producer, said supply globally may be constrained because of a lack of new discoveries and declining output at ageing mines.
``We feel very optimistic about the markets,'' Chief Executive Officer Richard Adkerson said yesterday.
Tin gained $475 to $18,800 a ton as inventories fell 20 tons to 5,645 tons, the lowest since Aug. 21.
Lead rose $31 to $1,830 a ton, zinc fell $15 to $1,735 a ton and nickel gained $100 to $18,600 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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