Copper slides in London as LME stockpiles jump most in 6 months

Copper dropped for a third straight session in London as stockpiles of the metal used in wires and pipes jumped the most in six months, indicating a supply squeeze may be easing.

Inventory at warehouses monitored by the London Metal Exchange gained 7,750 metric tons, or 6.9 percent, to 120,825 tons, the LME said today in a daily report. Still, stockpiles are equal to less than three days of global demand.

"The physical market is very well-supplied," said Andrew Silver, a trader at London-based Natexis Commodity Markets, one of 11 companies that trade on the LME floor.

Copper for delivery in three months on the LME dropped $95, or 1.3 percent, to $7,450 a ton as of 4:21 p.m. local time. It has declined 2.7 percent in the past three sessions. The three- month contract traded at a record $8,800 a ton May 11.

Copper for delivery in December lost 6.1 cents, or 1.8 percent, to $3.39 a pound on the Comex division of the New York Mercantile Exchange.

Most of today's increases in LME copper stockpiles were recorded in Singapore, where inventory rose by 7,025 tons. Singapore, Asia's trading hub, is the leading point of export to China, the world's largest user of copper, and southeast Asia.

Stockpiles rose even as output at producing companies fell. BHP Billiton Ltd., the world's largest mining company, said today production dropped 19 percent to 249,900 tons in the quarter ended Sept. 30 after workers at the Escondida mine in Chile stopped work for four weeks in August and September. Scheduled maintenance at Olympic Dam in Australia also cut output.

Lead, Aluminium
Maintenance work reduced BHP Billiton's zinc and lead production in Australia, the Melbourne-based company said. Lead output fell 25 percent and zinc 28 percent. BHP Billiton owns the Cannington site in Australia, the world's largest lead mine.

Lower production at Cannington sent lead to a record $1,550 a ton on Oct. 16. Prices gained $8 to $1,520 a ton today.

Aluminium declined after Norsk Hydro ASA, the world's fourth-largest producer last year, said demand will decline in 2007 as economic growth slows.

"The primary aluminium market is expected to move from a moderate deficit in 2006 to a moderate surplus in 2007," the company said in a statement accompanying its third-quarter earnings. "Key economic indicators signal lower global growth in 2007."

OAO Russian Aluminium, creating the world's largest metal producer in a merger OAO Sual Group, said yesterday prices will stay at about $2,300 to $2,600 a ton for "a number of years" as supplies remain tight.

Aluminium fell $16, or 0.6 percent, to $2,689 a ton.

Among other metals on the LME, zinc dropped $15, or 0.4 percent, to $3,905 a ton and tin lost $175, or 1.7 percent, at $10,200. Nickel declined $150, or 0.5 percent, to $32,250 a ton.