Friday May 9, 10:27 AM
Metals - Copper lower on rising stocks, equity market weakness
LONDON (Thomson Financial) - Copper fell on rising stocks, falling demand from Asia and as equity market weakness reignited fears of lower demand ahead.
The London Metal exchange reported, in a daily note, that copper stocks across
the world rose over 11,000 tonnes and inventories are now coming back from recently hitting nine month lows.
'Rising copper LME stocks will probably force copper prices lower. Copper seems to have missed the chance of a 'super-spike' and a return to work by striking miners at Codelco and a lack of Chinese buying looks likely to allow prices to fall,' said Fairfax analyst John Meyer.
At 10:05 a.m., London Metal Exchange copper for three-month delivery was trading at $8,250 per tonne against $8,300 per tonne at the close on Thursday.
The end of a 20-day contract workers' strike at Codelco in Chile, the world's largest copper producer earlier this week, has calmed fears of a supply shortfall for the red metal, taking the heat out of recent price gains.
Meanwhile, a firmer dollar has also pressured metals across the complex, with commodities priced in the U.S. currency becoming less attractive as a hedge against rising inflation and the greenback's recent slump. While the U.S. currency was weaker against the euro this morning, it remains a long way off its recent record lows.
Elsewhere, leading shares in London opened lower as Asia fell back this morning as record oil prices sparked concerns of worldwide inflationary pressure and disappointing earnings news from U.S. insurer AIG weighed on sentiment with financials trading weaker. Such weakness has re-ignited worries demand for industrial commodities might get hit as the economy weakens.
In other metals on the LME, lead was steady trading at $2,350 per tonne against $2,320 per tonne at the close on Thursday.
Zinc for delivery in three months was up at $2,229 per tonne against $2,218, while aluminium was up at $2,900 per tonne against $2,875.
Nickel eased to $27,088 per tonne against $27,450, while tin traded higher at $24,500 per tonne against $24,475.
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