Copper prices fell to a one-week low after inventories in China, the worlds largest consumer of the metal, jumped to the highest level in two years.
Stockpiles monitored by the Shanghai Futures Exchange climbed 12 percent this week to 97,396 metric tonnes, the most since June 2007. The price of the metal has doubled this year, driven by record purchases by China in the first half.
The fundamental outlook remains weak, as illustrated by inventory trends, Michael Lewis and Joel Crane, analysts at Deutsche Bank AG in New York, said in a report. This shows lack of demand from China.
Copper futures for December delivery fell 3 cents, or 1 percent, to $2.8465 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $2.825, the lowest level for a most-active contract since September 3. The price dropped 0.7 percent this week.
Imports of copper and products by China fell 20 percent in August to 325,098 tonnes from a month earlier, the Beijing-based customs office said today. Imports surged 83 percent from a year earlier.
Earlier, copper rose as much as 1.4 percent as a decline by the dollar boosted demand for raw materials as a hedge against inflation.
The greenback extended a decline to the lowest level in almost a year against a basket of six major currencies. Some traders buy commodities as the dollar falls to preserve purchasing power.
If the dollar continues to move lower, it gives the base metals some additional room on the upside, said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. All eyes are on the currency.
On the London Metal Exchange, copper for delivery in three months declined $44, or 0.7 percent, to $6,250 a metric tonne ($2.83 a pound).
Aluminum, nickel, lead and zinc also fell in London. Tin rose.