Copper prices stumbled on Monday as renewed worries about Japan's crisis, weak demand from top consumer China and rising stocks persuaded investors to retreat from assets perceived to be risky. The benchmark copper contract on the London Metal Exchange closed at $9,535 a tonne from an earlier low of $9,510.25 a tonne and down from $9,685 at Friday's close.
-- Copper stocks at highest since last July Copper, which is used in the power and construction sectors, is down about 6 percent since hitting a record high of $10,190 on February 15. "Out of China you just don't hear anything positive. There is apparently a lot of stock hidden and not hidden in China," said MF Global analyst Edward Meir, adding that speculation of further monetary tightening there weighed on sentiment.
"There are questions about how strong demand from China will be," he added. China's apparent demand for refined copper slumped 12.5 percent in February, data showed last week. Selling was also triggered by news that the operator of Japan's crippled nuclear plant had given out mistaken radiation readings.
"Japan is not a big user of base metals but it still is a consumer that is pretty much out of the market," Meir said. "This is a real big mess and they are not coming back anytime soon." Unrest in North Africa and the Middle East also dented risk appetite. Copper was broadly unchanged after data released at 1400 GMT showed that pending sales of previously owned US homes unexpectedly rose in February.
"It is another small brick in the wall of recovery but maybe the market was hoping for a better figure," Alex Heath of RBC Capital Markets said. Stocks of copper in London Metal Exchange warehouses, which at 439,900 tonnes were up more than 25 percent since December 9 at their highest since last July. "The rise in inventories indicates there is still quite a bit of unreported material still available, suggesting perhaps the market is not as tight as the price would suggest," said Daniel Major, analyst at RBS.
On the physical market premiums had stagnated near two-year lows until last week. "Physical demand in China has not been as strong as it was anticipated to be at this time of the year," said Numis Securities base metals analyst Andy Davidson. European premiums for physical material rose last week ahead of expectations of higher demand in the traditionally strong second quarter, when China is expected to return to the copper market.
Zinc finished at $2,340 a tonne from $2,378, lead ended at $2,628 from $2,670, tin, untraded in rings, was bid at $31,500 from Friday's last bid at $31,750, and nickel closed at $26,220 from $27,050. Three-month aluminium, also untraded in rings, was bid at $2,615 a tonne from $2,641 a tonne on Friday. The metal used in transport, packaging and construction has been helped recently by expectations of higher energy costs in the smelting process.
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