Copper stockpiles in warehouses monitored by the London Metal Exchange jumped the most in four years after deliveries of the metal into Antwerp, helping send prices to a seven-week low.
Inventories rose 9.4 percent, the most since Sept. 5, 2008, to 240,450 metric tons on the 21,300-ton shipment into the Belgian port city, data from the bourse showed today. Local stockpiles are the highest since Feb. 11, 2000, the data showed. Lead and zinc inventories in Antwerp surged to the highest levels since at least 1994, according to the figures.
The copper delivery “has hurt sentiment, highlighting the apparent abundance of refined units and current levels of weak demand,” Leon Westgate, an analyst at Standard Bank Plc, said in a report. “The key will be whether today’s inflow was a one-off or the start of a trend. If it is the latter, it may well be bearish for prices but ultimately bullish for premiums.”
Copper for three-month delivery dropped as much as 1.6 percent to $7,697 a ton on the LME, the lowest level since Sept. 7. The exchange has more than 600 registered warehouses in locations from Singapore to the U.S. that are intended to ensure metal deliveries against futures.
The copper was likely diverted to Antwerp from China and is probably “tightly held,” according to Westgate. It may end up getting stuck in lines that are already affecting other LME warehouses, thus ultimately reducing availability in the market, he said.
“It will be interesting to see how the situation evolves should copper consumers, concerned about the global economy, look to take less metal on long-term contract next year and decide to take more exposure to the spot premium market,” Westgate said.
Buyers in Singapore are paying a premium for zinc of $110 a ton, the most in at least 10 years, and a $95-a-ton premium for lead, more than twice the average over the past decade, Metal Bulletin data on Bloomberg show. The premiums are added to the price of metal on the LME.
Removing metal earmarked for delivery in Antwerp may take as long as 57 days, according to Bloomberg calculations. The wait for metal is 48 weeks in Detroit and 57 weeks in the Dutch city of Vlissingen, they show.
“It’s a continuation of the trend we’ve seen in terms of metal going in over the past few months” into Antwerp, Gayle Berry, an analyst at Barclays Plc in London, said by phone today. “It’s becoming similar to some other locations whereby queues are beginning to form for some of the metals.”
Lead stockpiles jumped 5.3 percent to 326,675 tons as inventories in Antwerp surged by 16,425 tons. Zinc holdings rose 2.7 percent to 1.17 million tons with 34,275 tons added in the city, the data showed.
Antwerp has 57 warehouses authorized by the LME to store metals operated by nine companies, according to the exchange’s website. NEMS Ltd., owned by metals trader Trafigura Beheer BV, operates 16 warehouses in the city. NEMS cannot discuss movement of LME metals, Victoria Dix, head of media relations at Trafigura, said by e-mail today.