Copper Declines for Fourth Day on Stockpiles, Crude Oil, Dollar

By Glenys Sim

Sept. 2 (Bloomberg) -- Copper declined for a fourth day as global inventories continued to climb, oil tumbled and the U.S. dollar strengthened. Zinc also fell.

Stockpiles monitored by the London Metal Exchange stood at a seven-month high of 173,725 metric tons yesterday, partly on slow seasonal demand. Crude fell to 5-month low after Hurricane Gustav weakened, easing concern of damage to rigs and refineries.

``We've seen oil and the dollar drive the rest of the commodities complex in the past few weeks,'' Wu Jianjian, an analyst at Yongan Futures Co. in Zhejiang, said today.

Copper for delivery in three months dropped as much as 1.3 percent to $7,210 a ton on the London Metal Exchange at 3:09 p.m. Singapore time, extending yesterday's 2.7 percent decline.

November-delivery copper declined as much as 2.1 percent to 56,880 ($8,311) a ton on the Shanghai Futures Exchange. The most- active contract ended the day at 57,300 yuan.

Manufacturing in China contracted for a second month in August, underscoring the risk of a slump in the world's fourth- biggest economy, the China Federation of Logistics and Purchasing said yesterday. The country is the world's biggest copper user.

``Domestic prices have been taking direction from the international markets and have a slight downside bias as sentiment is weak with the stock market not doing well on weak economic data,'' said Wu.

An index released by CLSA Asia-Pacific Markets yesterday, also showed manufacturing shrank last month. It was the first contraction recorded by that survey since November 2005.

Zinc Slumps

Zinc on the LME slipped 3 percent to $1,726 a ton at 3:10 p.m. Singapore time, while Shanghai zinc for November delivery ended 2.1 percent down at 14,045 yuan a ton.

The metal dropped as concerns faded that supply would be disrupted by a hurricane in the U.S. and an earthquake in China.

Nyrstar NV, the world's largest zinc producer, said its U.S. smelter is unaffected by Hurricane Gustav because the plant switched to raw material supplied by the nearby Gordonsville mine in April.

In China, Sichuan Huidong Lead & Zinc Mine, the largest zinc producer in the earthquake-affected region around Panzhihua, said operations weren't affected by the Aug. 30 earthquake in Sichuan province. Yunnan Chihong Zinc & Germanium Co. China's fifth- biggest producer of zinc, also said it was not affected.

Among other LME-traded metals, aluminum was 0.5 percent lower at $2,685, lead slipped 2.2 percent to $1,893, nickel lost 0.5 percent to $19,200 and tin fell 0.5 percent to $18,800 as of 3:11 p.m. Singapore time.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net