copper extends losses

Metals - Copper extends losses after another large build in stockpiles
October 18, 2007: 05:08 AM EST


LONDON, Oct. 18, 2007 (Thomson Financial delivered by Newstex) -- Copper extended losses after further large deliveries into London Metals Exchange monitored warehouses boosted inventories of the red metal to a new five-month high.

Copper stockpiles increased by 4,625 tonnes to 147,750 tonnes in the LME's daily report of metal inventories. Inventories of the red metal have increased by over 16,000 tonnes since the beginning of October, sparking fears that fourth-quarter demand will not be as high as first expected.

'Despite the positive sentiment which saw prices rise last week, there is still uncertainty over all,' said Barclays (NYSE:BCS) Capital analyst Sudakshina Unnikrishnan. 'The near-term demand picture still looks unclear at the moment.'
At 9.38 am, LME copper for three-month delivery was down at 7,920 usd per tonne against 7,9650 usd at the close yesterday. Earlier, copper dipped below 7,900 usd, touching an intra-day low of 7,890 usd.

Analysts said buyers in China, the world's largest consumer of the red metal, have been reluctant to trade with copper prices above 8,000 usd recently.

Elsewhere, lead inventories increased significantly for the third straight day, up 1,750 tonnes today to 31,450 tonnes, having previously sat close to historical lows over the past weeks -- which has seen prices rally up to a series of all-time highs.

Lead's recent price gains have finally started bringing stockpiles into warehouses, analysts said, with over 5,500 tonnes delivered in since Monday.

However, while prices have slipped over the past two days, lead has proved resilient, edging up this morning as the fundamental supply picture remains tight.

'The lead market continues to be very tight,' said Unnikrishnan at Barclays Capital. 'But if we keep seeing these kind of stock rises it is going to cap gains,' she added.

Lead prices stood at 3,585 usd per tonne against 3,550 usd at the close yesterday.

Lead rallied up to its all-time highs on a combination of low LME inventories, continuing supply disruptions in Australia, strong demand from the battery industry and limited Chinese exports.

In other metals, three-month nickel was down at 31,600 usd per tonne against 31,800 usd at the close yesterday.

Aluminium edged up to 2,515 usd per tonne, basis three months, from 2,510 usd, while zinc slipped to 2,970 usd from 2,975 usd. Finally, three-month tin crept higher to 16,425 usd per tonne against 16,400 usd.

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Newstex ID: AFX-0013-20319313