Copper Sags on Concern Supply Will Top Demand as Output Gains

Copper futures fell for a second day in New York as an increase in inventories fueled concern that demand won’t be strong enough to whittle away excess supplies amid the outlook for increased mine production.

Stockpiles tracked by the London Metal Exchange, which have risen 49 percent this year, gained for a second straight day. Glencore Xstrata Plc, the metals producer and commodity trader, said yesterday that quarterly copper output surged by 34 percent as African mines added to volumes.

“The metals group is saddled with significant surpluses going forward,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. “Although stronger demand going into 2014 will likely reduce some of this excess, it likely will not be strong enough to nudge the markets toward a balance or a deficit type of situation.”

Copper futures for delivery in December declined 0.1 percent to $3.2985 a pound at 1:16 p.m. on the Comex in New York. Prices fell 0.7 percent in October, the first drop in four months.

Inventories monitored by the LME rose 0.1 percent to 476,400 metric tons, bourse data showed. Stockpiles in New Orleans, the biggest copper repository, expanded to 195,850 tons, capping the biggest two-session jump in almost two months.

Prices also slipped as the prospect of reduced Federal Reserve stimulus may cut demand and as a rise in the U.S. dollar eroded the appeal of the metal as an alternative investment, Bill O’Neill, a part Advisors in Upper Saddle River, New Jersey, said in a telephone interview.

The Institute for Supply Management’s U.S. factory index climbed to 56.4, the highest since April 2011, weakening the case for the Fed to maintain stimulus. Readings above 50 signal growth. The U.S. central bank maintained its monthly $85 billion in bond purchases this week.

On the LME, copper for delivery in three months lost 0.1 0.5 percent to $7,245 a ton ($3.29 a pound).

Aluminum, nickel, tin and zinc were also lower in London. Lead gained.

To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net; Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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