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LME Asian Copper Stocks Above U.S. First Time Since 2008

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Aug. 20 (Bloomberg) -- Copper inventories in Asian warehouses approved by the London Metal Exchange surpassed those held in the U.S. for the first time since 2008.

Copper stockpiles held in South Korea, Singapore and Malaysia rose 450 metric tons to 110,225 tons, while inventories in the U.S., the only LME-approved location in the Americas, dropped 775 tons to 109,625 tons, exchange data showed today. The last time there was more copper in Asian warehouses than in the U.S. storage points was on Nov. 11, 2008.

Asia is now the biggest location for copper inventories. The LME-monitored warehouses in South Korea are the closest to China, the world’s biggest buyer of the commodity. About 39 percent of global demand for the metal in 2011 came from China and the U.S. accounted for 9.2 percent, according to Morgan Stanley.

“From a point of view of industrial logic you would place your stocks ideally as close to your major consumer as possible” in case there is an upturn in demand from the user, Duncan Hobbs, an analyst at Macquarie Group Ltd. in London, said by phone today. “Without knowing who exactly holds the stocks, it’s difficult to say for sure whether the metal is being placed out of the way for tactical reasons or whether it’s being positioned in anticipation of meeting consumer demand.”

Stockpiles in Asia almost tripled this year and U.S inventories are down 62 percent. South Korea accounts for 75 percent of Asian stockpiles while the city of St. Louis holds most copper in the U.S., LME data shows.

Copper “demand in the U.S. has been OK, as has been the recovery,” Randy North, a trader at RBC Capital Markets Ltd. in New York, said today by e-mail. The recent inventory increases in Korea may well be metal that’s usually shipped to China as part of long-term agreements and is being diverted to South Korea because of slowing Chinese demand, he said.

Total copper inventories tracked by the LME slipped 0.2 percent to 234,150 tons after a sixth weekly drop in seven last week.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net