Metals - Copper falls back from 10 week high after increase in LME stocks UPDATE

Metals - Copper falls back from 10 week high after increase in LME stocks UPDATE

	Published : Mon, 23 Jul 2007 11:34 By : Agencies Print this Story

(Updates prices, adds details)

LONDON (Thomson Financial) - Copper fell back after hitting a fresh 10 week high in early trade, following reports that stockpiles at London Metals Exchange (LME) certified warehouses had risen back above 100,000 tonnes.

Copper inventories increased by 2,725 tonnes to 101,400 tonnes, helping to ease short-term supply concerns.

'The stocks are up and the market is very fickle at the moment so we are seeing prices come off a bit,' a trader at the LME said. 'The market probably went home a little bit long on Friday, and with some bearish news and quite light trade it's going to slip down.'

At 11.14 am, LME copper for three-month delivery was trading at 8,090 usd per tonne against 8,111 usd at the close on Friday.

'Markets are slightly lower this morning, after a very solid start,' said JP Morgan analyst, Michael Jansen.

Early in the session, copper had traded up to 8,212 usd, its highest level since early May, as strong Chinese economic growth continued to buoy investor confidence.

In data out last week, the statistics Bureau in Beijing said China's economy expanded by 11.9 pct in the second quarter, compared with last year, to record its fastest growth in 12 years.

However, reports that Chinese copper imports were down 6.8 pct in June from May, have added to pressure on prices this morning, despite a strong long-term demand outlook for the world's largest consumer of the red metal.

A decline in Chinese imports going into the second half of the year has been widely predicted by analysts, following massive inflows into the country during the first few months of the year.

Prices continue to be underpinned by concerns over the effect of labour disputes in the Americas on supply.

While reports that sub-contract workers have ended their blockade of Codelco's El Salvador mine have eased concerns slightly, the strike at Xstrata's CCR copper refinery in Montreal that began on June 11 is still not resolved.

In other metals, lead was trading at 3,463 usd per tonne against 3,494 usd at the close on Friday. It matched its all time high of 3,500 usd early in the session, as supply concerns and inflows of fund money continued to support prices which have more than doubled this year.

'Lead is failing ... around the 3,500 usd a tonne area,' said Jansen at JP Morgan. 'Probably not for long however as lower levels of LME inventory plus less Chinese availability going forward will almost certainly encourage lead to

retest the 3,500 usd a tonne area.'

Shipments of the metal this year from key producers have been hit by the imposition of a new export tax from China and the shutdown of a major port in Western Australia, leading to the rally on prices.

Nickel, which has lost around 17,500 usd per tonne in value since striking its all-time high in May, recovered slightly to trade at 34,325 usd per tonne against 33,905 usd.

Tin was higher at 15,600 from 15,450. Earlier in the session, tin hit 15,700 usd, its highest point since the new contract started in 1989.

Among other metals, aluminium fell to 2,833 usd per tonne from 2,856 usd and zinc was down at 3,702 usd per tonne from 3,705 usd.

d.sheppard@thomson.com

ds1/slm

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