Copper inventories monitored by the London Metal Exchange increased 1.8 percent to 159,350 metric tons, as stockpiles in Busan, South Korea, jumped by almost half. The metal reached a 19-week high on July 3 after a report showing U.S. unemployment at the lowest in almost six years boosted speculation that demand will rise.
“With the inventories increasing, we’re seeing a little bit of a negative tone in the market, especially since the rally we had last week was a little bit overdone,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.
Copper futures for delivery in September dropped 0.6 percent to settle at $3.261 a pound at 1:11 p.m. on the Comex in New York, where floor trading was closed on July 4 for the Independence Day holiday. Prices rose 3.5 percent last week, the most since September 20.
The metal’s 14-day relative-strength index stayed above 70 since July 2, a level seen by some traders who study technical charts as a sign that the price is poised to fall.
“I’m not too concerned of any major pullback,” said Power. The price drop may be “a buying opportunity,” he said.
On the LME, copper for delivery in three months declined 0.3 percent to $7,125 a ton.
Nickel fell 0.4 percent to $19,330 a ton in London. Prices have surged 39 percent this year after Indonesia, the largest producer of the metal from mines, banned raw-ore exports in January. Voters will elect a new president on July 9.
The metal declined “ahead of uncertainty surrounding the Indonesian elections,” Cailey Barker, an analyst at Numis Securities Ltd. in London, wrote in a note. “The impact on commodity exports with a change of leadership is unclear. Either way, we do not expect a sudden lifting of export restrictions.”
Zinc, aluminum and lead rose in London, while tin fell.
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