Copper ends LME weak, more stock increases possible

Copper prices finished Wednesday's open-outcry sessions on the London Metal Exchange (LME) two percent lower, hammered by a hefty warehouse inventory increase, and more stock rises are possible, traders said.
"It would not surprise me if that happened. China overbought earlier in the year, and it was obvious they were sitting on a lot of copper," a trader said.
Total stocks rose 35 percent and LME warehouses in Singapore saw the bulk of the increase as off-warrant metal was registered - up 21,600 tonnes.
"The copper stock increase was really more of a psychological blow to the market. If it were delivered against an existing short position, there would not be any additional selling associated with the delivery," Man Metals said in a daily report.
"What surprised the market was the amount of physical copper sitting around in Asia," Man added.
European physical sources said that the material had been put on warrant to cover a short position and they expected further increases on Thursday. There was talk that another 20,000 to 24,000 tonnes would arrive in warehouse on Thursday.
The cash/threes backwardation, which contracted on Tuesday afternoon in anticipation of the stock rise, held steady at levels of $47/50.
Three months prices flirted nervously at one-week lows just under $2,745 a tonne before ending the session at $2,761, down $57 from Tuesday's kerb.
Earlier, tight prompt dates continued to dominate activity, and LME compliance officials again monitored the market. TOM/next (belated borrowing against previous day's prompt) traded heavily between $0.50 and $3.00 backwardation, last at $1.00 backwardation.
Traders said TOM/next was being made available under LME regulations that restrict the level of backwardations. Most recent LME data for two days ago showed that one long holder held in excess of 90 percent of cash/TOM holdings.
As stipulated, metal was made available at level money on Tuesday, but the premiums now prevailing suggest that the position is diminishing.
The rest of the complex was less volatile, and most held either side of overnight levels.
Aluminium meandered in an extremely tight range before drifting back on the kerb to session lows, with last business at $1,713, down $5.
Nickel was resilient to copper's losses, advancing to $13,800, up $150, while tin was aided by fund buying, ending at a steady $9,050/9,075.
Lead was softer, closing down $5 at $844/845, while zinc finished $7 lower at $982.