Copper Seen Dropping as Stockpiles Increase, Aluminum May Climb

Copper is poised to decline 2 percent this year as supply outpaces demand and boosts stockpiles, while aluminum may advance as demand gains, said Australia’s Bureau of Resources and Energy Economics.

Copper may average $7,788 a metric ton in 2013 from $7,948 a year earlier, the Canberra-based bureau said in a report today. The bureau in December forecast $7,675 for this year. World inventories may surge 16 percent to 1.3 million tons in 2013, or three weeks of consumption, it said. That compares with a December forecast of 1.1 million tons.

Prices fell to a seven-month low yesterday on concerns that Europe’s debt turmoil will damp the economy and property curbs will erode demand in China, the biggest user. The country’s industrial output had the weakest start to a year since 2009 and copper imports slid to the lowest in 20 months in February, when there was a weeklong New Year holiday. Stockpiles are rising at an “alarming” rate, Barclays Plc said March 18.

“Copper consumption is forecast to grow, primarily in emerging economies, but by a lower amount than the increase in production,” today’s report said. “The increase in supply will come from a number of large recently commissioned mines in Indonesia, Peru and Mongolia ramping up to full production.”

Copper for delivery in three months slipped as much 1.2 percent to $7,486.25 a ton on the London Metal Exchange yesterday, the lowest level since Aug. 21. The metal traded at $7,577 at 10:02 a.m. Singapore time today.

Aluminum may average $2,075 a ton in 2013 from $2,017 last year as consumption increases, the bureau said. That compares with a December estimate of $2,118 for 2013. Alumina, the principal raw material in aluminum, may average $342 a ton this year from $319 in 2012.

Nickel may average $17,586 a ton in 2013 from $17,505 last year, the report said. Zinc may average $1,983 a ton this year from $1,947 last year, it said.

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