Copper Slumps Daily Limit in Shanghai on Stockpiles, Production

By Glenys Sim

Sept. 14 (Bloomberg) -- Copper tumbled by the exchange- imposed 5 percent daily limit in Shanghai as expanding inventories and growing production in China fuel concern that supply will outpace demand.

Inventories tallied by the London Metal Exchange climbed for an 11th day to 318,325 metric tons yesterday, the highest level since May 27. Stockpiles of copper in Shanghai rose for the seventh time last week to 97,396 tons, the highest level in more than two years.

“There are concerns that base metals prices earlier increased more quickly than justified by fundamentals,” David Moore, commodity strategist at Commonwealth Bank of Australia, said in an e-mail today.

Copper for December delivery on the Shanghai Futures Exchange fell as much as 2,490 yuan from the previous settlement price to 47,160 yuan ($6,907) a metric ton.

Three-month delivery copper fell as much as 2.9 percent to $6,070 a ton on the London Metal Exchange, and traded at $6,905 a ton at 9:21 a.m. in Singapore. The contract is down for a fourth day, the longest slump since the five-day decline ended July 8. December-delivery copper in New York lost as much as 3 percent to $2.7625 a pound.

“The Chinese data showed that China’s copper imports fell in August from July, and China’s production of a number of metals is increasing,” said Moore.

China’s imports of copper and the metal’s products in August dropped for a second month to 325,098 tons, 20 percent down from a month earlier, according to data on Bloomberg. The country’s production of copper in August rose 9 percent from the previous month to 365,000 tons.

Zinc, Lead

December-delivery zinc in Shanghai lost as much as 765 yuan, or 5 percent from the previous settlement, to 14,515 yuan a ton. Zinc in London slid as much as 1.9 percent to $1,830 a ton

“Zinc is being dragged down by lead as investors view them as ‘sister metals’, but in fact the problems we’ve seen in lead has very little to do with zinc at all,” Tao Jinfeng, an analyst at Jiangsu Donghua Futures Co., said from Tianjin.

Lead output in China expanded in August to the highest level this year, even as the country cracked down on smelters after thousands of children were poisoned. China is estimated to produce 3.14 million tons and consume 2.87 million tons of the metal this year, according to Feng Juncong, an analyst at state- backed researcher Beijing Antaike Information Development Co.

Lead declined for a fourth day, the longest losing streak since the four-day period ended April 28, by as much as 1.5 percent to $2,035 a ton.

Among other LME-traded metals, aluminum fell 0.7 percent to $1,832 a ton, nickel dropped 2.7 percent to $16,500 a ton, while tin hadn’t traded as of 9:50 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net