Copper Declines to Four-Month Low as LME Inventories Soar

  • LME-tracked inventories post biggest five day gain since 2005
  • Antofagasta, Freeport-McMoRan lead decline in miners

Copper futures slumped to the lowest in almost four months as swelling stockpiles added to evidence that demand isn’t strong enough to ease a global glut.

Inventories at warehouses tracked by the London Metal Exchange expanded 39 percent in the past five sessions, the most since August 2005, data compiled by Bloomberg show. Copper imports fell for a second straight month in May in China, the world’s largest user, customs data released Wednesday showed.

Copper has fallen 4.5 percent this year as the production cuts by miners including Freeport McMoRan Inc. and Glencore Plc are offset by new capacity coming on line in China. At the same time, demand is slowing as the nation’s economy expands at the weakest pace in a generation. In February, refined copper output topped use by 24,000 metric tons, the International Copper Study Group said last month.

“There’s jut too much copper in the world,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “All the stimulus in China hasn’t helped. Expectations of stronger Chinese demand are just not taking place.”

Copper futures for July delivery declined 1.1 percent to settle at $2.039 a pound at 1:14 p.m. on the Comex in New York, after touching $2.013, the lowest for a most active contract since Feb. 12.

In London, copper for delivery in three months declined 1.4 percent to $4,515 a metric ton ($2.05 a pound).

  • A gauge of 18 global base-metal producers slipped 3.2 percent, set for the biggest loss in a month. Antofagasta Plc, Vale SA and Phoenix-based Freeport led the declines.
  • Antofagasta, the miner controlled by Chile’s richest family, dropped as much as 7.8 percent in London after Canaccord Genuity cut its recommendation to hold on concern that changes in Chile’s tax system could pressure margins and the dividend.
  • Aluminum, nickel, lead and tin also declined on the LME while zinc gained.
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