Shanghai copper falls

Copper futures in Shanghai fell 1 percent on Tuesday, retreating after gains in early trade, as rumours of a big delivery of refined metal into China offset concerns about limited domestic stockpiles. Shanghai exchange warehouse inventories fell to 21,796 tonnes last week, enough for two days of Chinese consumption, putting upward pressure on spot prices and lifting futures, but prices could start to rise again after five weeks of falls, traders said.
"Market talk of tens of thousands of tonnes of copper arriving weighed on prices during the morning session," a local spot trader said, adding that spot premiums had fallen. A physical trader in Singapore said: "Even last week we were hearing about a large tonnage of copper, landing either in South Korea or China. We are hearing that now the decision has been made to deliver to China." He said the copper was likely to have come from Chile. Shanghai November copper fell 660 yuan, or 1.1 percent, to 59,080 yuan ($8,632) a tonne at the daily close, after touching 60,110 yuan during morning trade.
Low copper stockpiles in Shanghai have lifted spot premiums to 500-800 yuan a tonne and squeezed futures prices in recent sessions, traders said. Spot copper premiums in Shanghai hit 1,000 yuan a tonne last week, the highest since January. "The deliveries could weigh on the futures prices in a short term, but I do not think the imports excluding amounts from long-term contracts would be huge, as the discount between Shanghai and London was not profitable," said analyst Pang Ying at trading house Runtop.
London Metal Exchange three-month copper fell $35 to $7,625 by 0700 GMT, after diving by 2.6 percent on Friday before a long weekend. The dollar climbed towards a six-month high against the euro before the German Ifo survey of business sentiment, with investors seeking clues on whether the euro zone economy is hurting enough for a cut in interest rates.
The discount for third-month Shanghai copper futures versus the benchmark London contract, including China's 17 percent VAT, narrowed to 2,132 yuan, from 2,726 yuan a tonne on Friday. The discount shrank to 716 yuan on August 13, its narrowest since March. London three-month zinc dropped $55, or 3 percent, to $1,775, following a 2.4 percent fall in its Shanghai counterpart last session. Shanghai zinc dropped 0.5 percent to 14,115 yuan a tonne on Tuesday.