LONDON: Copper prices slipped on Monday as stocks in London Metal Exchange-approved warehouses jumped, suggesting lacklustre demand, and volumes fell ahead of holidays in top consumer China.
Benchmark copper on the London exchange ended down 0.1 percent at $6,396 a tonne, close to the four-week low touched last week.
Latest data from the LME shows inventories of the metal used as a gauge of economic health climbed 36,325 tonnes to 232,225 tonnes. Stocks are up more than 46,000 tonnes or 25 percent since last week.
"(Rising copper stocks) seem to be a trend, suggesting demand hasn't really picked up in the way people were expecting," a copper trader said, adding that activity in the physical market was weak.
"Funds trade on headline stocks, creating momentum that others jump on."
CHINA: China accounts for almost half of global copper demand estimated around 24 million tonnes this year.
Expectations are for a pick-up in the seasonally strong April to June period, ahead of rising Chinese construction activity in the third quarter. Fiscal and monetary stimulus earlier this year have reinforced the idea.
"The rally earlier this year was driven by the idea of an improving demand in China due to stimulus," said Julius Baer analyst Carsten Menke. "Now we're waiting to see if these measures actually translate into increasing metals demand. The car market is still struggling, despite stimulus measures."
AUTOS: China's auto sales fell again in March but the pace of decline was the smallest in seven months, industry data showed.
IMPORTS: China's refined copper cathodes imports rose to 279,630 tonnes in March, up more than 30 percent from February, according to Reuters calculations based on data released by the General Administration of Customs.
HOLIDAY: China Labour Day holidays run from May 1-3.
POSITIONING: "The net speculative long in copper was completely liquidated over the week and positioning in the metal is now neutral," Marex Spectron analysts said in anote.
ALUMINIUM: Stocks of aluminium in LME warehouses rose 48,200 tonnes to 1.07 million tonnes. Deliveries were made into warehouses in Malaysia and Singapore.
ZINC: Historically low stocks of zinc in LME warehouses - around 81,000 tonnes - and large holdings of warrants have fuelled worries about a tight LME market, which can be seen in price differentials.
The premium for the zinc cash over the three-month contract at nearly $120 a tonne at the close on Friday is the highest since early December last year when it touched $125 a tonne.
PRICES: Aluminium was down 0.5 percent at $1,828, zinc gained 0.9 percent to $2,792, lead gained 0.9 percent to $1,969.5, tin lost 1.4 percent to $19,655 and nickel was bid at an unchanged $12,420 a tonne.
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