Copper, Little Changed in London, May Fall as Stockpiles Swell

By Anna Stablum

Sept. 17 (Bloomberg) -- Copper, little changed in London today, may fall as swelling inventories fuel concern that this year’s rally carried prices too high to reflect demand.

Stockpiles tallied by the London Metal Exchange expanded for a 15th day to 324,375 metric tons, the most since May 26. Inventories have increased 8.5 percent this month after rising 6.4 percent in August and 5.6 percent in July. In Shanghai, stockpiles rose 12 percent last week to 97,396 tons, the highest level since June 2007.

“The price should adjust to the high inventories and a looming oversupply,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said by phone. “We have had huge increases in stocks on the LME and in Shanghai, and there are probably undisclosed inventories in China as well.”

Copper for three-month delivery rose $17.50, or 0.3 percent, to $6,437.50 a ton on the LME at 9:55 a.m. local time. The metal has doubled in 2009. Futures for December delivery slipped 0.1 percent to $2.9325 a pound in electronic trading on the New York Mercantile Exchange’s Comex division.

A report today probably will show that builders in the U.S., the world’s second-biggest copper user after China, broke ground in August on the most houses in nine months, according to economists. Construction uses 25 percent of world output of the metal, the Copper Development Association’s Web site shows.

Confidence Survey

Housing starts rose 2.9 percent to an annual rate of 598,000, according to a Bloomberg News survey. The Commerce Department report is due at 1:30 p.m. London time.

Prices also gained as a survey of Bloomberg users on six continents showed that confidence in the world economy held at a record high in September after reports suggested the recession is over. The Bloomberg Professional Global Confidence Index rose to 58.54 from 58.12 in August. It exceeded 50 for a second month, which means there were more optimists than pessimists.

Record first-half imports into China helped copper’s surge this year. The State Reserve Bureau, which buys commodities on behalf of the government, is estimated to have purchased 230,000 tons of copper this year, and Chinese traders and fabricators have bought another 600,000 tons, Mike Henry, head of base- metals marketing at BHP Billiton Ltd., said yesterday.

Consumer and industrial demand in China will support growth in copper demand, Henry said at a presentation in London. Existing supply and expanded production will be insufficient to meet demand by 2020, he said, predicting a 10 million-ton supply shortfall. BHP is the world’s biggest mining company.

Among other LME metals for three-month delivery, aluminum gained 1.3 percent to $1,951.50 a ton and tin fell 0.3 percent to $14,605 a ton. Lead rose 1.7 percent to $2,331 a ton, nickel advanced 2.5 percent to $17,730 a ton, and zinc gained 1.6 percent to $1,967 a ton.

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net