Copper futures drop as demand slides, supplies build

Preoccupations about the progress of economic development and growth pulled down copper futures to their lowest value in eight months on Wednesday, according to Reuters.

Worldwide demand for the reddish metal also is forecast to slow down as China, the globe's top consumer of the industrial metal, prepares to observe two days of holidays.

Wednesday prices for the industrial metal dropped to their lowest since early August of last year.

"Market sentiment has completely gone. It is with equities now, not with metals, and fundamentals are not improving. Premiums are still low, inventories are rising and the copper forward curve in London remains firmly in a contango," analyst Andrey Kryuchenkov with VTB Capital told the news source on Wednesday. "We are seeing more stocks going in than out at the moment … On the macro front there are concerns about growth."

At 9:01 a.m. on Wednesday, copper futures fell 0.28 percent, a 0.0095-cent loss to $3.361 per pound.

U.S. manufacturing slips
Concerns about the globe's economic development during the recovery from the Great Recession were underscored earlier this week.

The U.S., host of the globe's largest economy, also released weaker-than-anticipated economic data.

The U.S. also is the second-biggest consumer of the reddish metal.

Stockpiles surge
Bloomberg reports another factor that is pulling down copper futures is the increase to inventories.

Supplies of the base metal are forecast to climb in the face of minimal indications demonstrating demand will grow.

While a report is set for release on Wednesday regarding the U.S. services industries, which include housing and retailing, a report revealed euro zone manufacturing slipped for the 20th consecutive month.

Inventories of the base metal climbed to their highest level since the beginning of the final quarter of 2003.

"Base metals are telling a story about global growth which is not reflected in U.S. equity markets, for example," states an email to Bloomberg authored by macro strategist Guy Wolf with Marex Spectron Group in London. "There is limited physical demand and no shortage of supply. The rise in LME stocks is simply a reflection of this."

Inventories increase
The London Metal Exchange indicated supplies grew for a 33rd consecutive trading session to 572,325 tons, according to daily exchange figures cited by Bloomberg.

Those inventory figures are likely to remain elevated in the near future as China closes markets on Thursday and Friday. The Ching Ming Festival is set for Thursday, Friday and Saturday.

Accounting for roughly 40 percent of the globe's consumption of the reddish metal, the Asian nation is preparing for the observance of national holidays.

Notable past several trading sessions
Platts reports import premiums for LME-registered copper cathode brands progressively gained during the past several trading sessions.

Industry sources told the media outlet that buying interest was strong and the aperture to purchase remained available.

"The arbitrage opportunity associated with importing is straddling between a gain and a loss for the past few days," a North China-based analyst told the news source on Wednesday, indicating he learned of import premiums at $100 to $105 per metric ton.

But another market participant noted that competing sellers have taken a different tack.

"Some sellers have increased the premiums to compensate for the weaker copper prices," a southwestern China-based trader told Platts on Wednesday.

That trader noted an interest in gauging the progression of the market's performance during the next several days.

Expressing a preference to proceed with caution, the trader noted that domestic demand in the Asian nation is tepid amid the release of weaker-than-forecast economic data.

"I am not buying yet as I want observe the trend. Anyway, holiday is approaching," the southwestern Chinese copper market participant told the news source.