copper drops as supply concerns ease on lower chin

Copper Drops as Supply Concerns Ease on Lower Chinese Demand

By Millie Munshi

Nov. 22 (Bloomberg) -- Copper prices fell after supply concerns eased on signs that demand in China, the world's largest consumer of the metal, may slacken.

Consumption in China, fell 6.9 percent in the nine months ended September, the World Bureau of Metal Statistics said today. Production exceeded demand by 228,000 metric tons, the bureau said. Copper prices in New York have fallen 22 percent from a record in May on speculation that slower economic growth will trim purchases for the metal used in pipes and wires.

``The demand just isn't there,'' said Warren Gelman, president of Kataman Metals Inc. in St. Louis. ``With the lack of any major business going on between now and the end of the year, I think this market has to come off.''

Copper futures for March delivery fell 1.15 cents, or 0.4 percent, to $3.136 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the metal gained as much as 1.8 percent after stockpiles in warehouses monitored by the London Metal Exchange dropped. Prices still are up 70 percent in the past 12 months, partly because of production disruptions.

On the LME, copper for delivery in three months declined $80, or 1.1 percent, to $6,900 a metric ton after earlier topping $7,000 for the first time since Nov. 9.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

Copper in New York has fallen 6.3 percent this month as inventories rose to the highest since April 2004 and growth moderated in China. In October, the country's industrial output rose at the slowest pace in almost two years, the National Bureau of Statistics said on Nov. 15. Chinese copper imports have been declining since October 2005.

Prices for the metal, used in automobiles and air conditioners, have increased more than fourfold in the past five years as demand increased in China, the world's fastest growing major economy.

``A lot of the run-up in prices can be attributed to China,'' said Ronald Goodis, retail trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``But they're subject to `Economics 101' as well. As prices go too high, people have to reduce their demand.''