Copper Falls, Ends Longest Rally Since ’05 on China Probe

Copper futures fell, ending the longest rally in nine years, on signs that supplies will outpace demand in China, the world’s largest user of the metal used in wires and pipes.

This week, inventories monitored by the Shanghai Futures Exchange rose 4.6 percent, the first gain since mid-May. Audit findings of false gold trades by China spurred concerns that commodity financing will dry up. Authorities are probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as loan collateral.

“After the report on China’s false gold trades, copper traders are turning bearish,” RBC Capital Markets said in a note. “Continuous concerns over China related to slowing demand and decreasing security of lending will weigh on copper prices.”

Copper futures for September delivery fell 0.1 percent to settle at $3.168 at 1:10 p.m on the Comex in New York. The price rose in the previous 10 sessions, the longest rally since June 2005.

On the London Metal Exchange, copper for delivery in three months fell 0.1 percent to $6,945 a ton ($3.15 a pound). Aluminum, tin and and lead dropped, while nickel advanced.

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