By Anna Stablum
Sept. 23 (Bloomberg) -- Copper fell in London after two days of gains as stockpiles returned to growth and an index of European manufacturing and service industries rose less than estimated by economists.
A composite index of manufacturing and services in Europe climbed to 50.8 from 50.4 in August, Markit Economics said. Economists expected a gain to 51.3, according to a Bloomberg News survey. Copper stockpiles in warehouses monitored by the London Metal Exchange rose 175 metric tons, a daily report showed. They gained for 17 sessions before slipping yesterday.
“The euro-zone manufacturing PMI disappointed the market,” David Thurtell, an analyst at Citigroup Inc. in London, said by phone.
Copper for three-month delivery fell $70, or 1.1 percent, to $6,200 a ton on the LME at 10:31 a.m. local time. Futures for December delivery shed 1.4 percent to $2.8245 a pound on the New York Mercantile Exchange’s Comex division.
Nickel climbed to the highest in almost two weeks, the only gain among the six main industrial metals traded on the LME, as inventories declined.
Stockpiles of copper in LME-monitored warehouses increased to 331,950 tons. They have climbed 11 percent this month after gaining 6.4 percent in August and 5.6 percent in July.
“Rising exchange inventories and slower Chinese imports of refined metal have capped the market in the short term,” Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London, said in a report dated yesterday. Record inbound shipments in the first half helped the metal to more than double this year.
‘Dip Buying’
Chinese imports of refined copper dropped to 219,731 tons in August, figures showed yesterday. That was still more than double the year-earlier amount.
Lower prices triggered “good dip buying,” along with a weaker dollar that made metals priced in the currency cheaper for holders of other monies, according to Bhar. The Dollar Index, a six-currency gauge of the greenback’s performance, fell for a second day and has lost 6.5 percent this year.
“The fluctuations of the dollar appear to be a key factor, and expectations of continued weakness are underpinning the copper market,” Bhar said.
Among other LME metals for three-month delivery, nickel advanced $150, or 0.9 percent, to $17,900 a ton. It climbed as much as 2.5 percent to $18,185, the highest since Sept. 10. LME stockpiles fell 54 tons to 117,474 tons, according to the daily figures. They’re down 1.4 percent from this year’s high on Sept. 15.
“Stocks into LME warehouses have completely stopped over the last week,” Citigroup’s Thurtell said.
Nickel Demand
About two-thirds of world production of the metal is used to make stainless steel. Demand for stainless steel “should recover strongly,” according to Thurtell.
Global nickel output fell to 110,300 tons in July from 112,400 tons in June as demand rose to 109,300 tons from 107,700 tons, the International Nickel Study Group said on Sept. 16.
“Producers have done a good job of bringing supply back to demand,” Thurtell said.
Tin slipped $50, or 0.3 percent, to $14,650 a ton. The so- called backwardation, when metal for nearby delivery trades at a premium to the three-month price, rose yesterday to $730 a ton, the highest since June 2004.
“Tin is still among the tightest of the metals, at least as seen by the cash-three month spread and warrant concentration,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said by phone.
Aluminum lost 0.2 percent to $1,886 a ton, while lead fell 2.2 percent to $2,240 a ton. Zinc shed 1.6 percent to $1,915 a ton.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net
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