Barclays: Builds in SHFE copper stocks reflect soft physical market

LONDON (Commodity news world): Builds in Shanghai Futures Exchange inventories of copper signals continued softness in the physical market, said Barclays Capital in a research note.

According to the bank, stocks are now at 221,487 metric tons, their highest level since 2002, the bank says. This suggests consumers are keeping buying to an “absolute minimum” due to uncertainty about future demand.

“This is also being reflected in SHFE spreads with the copper contango widening again, and physical premiums which have been quoted as low as $60/t,” the bank added.

Bank also cite a Bloomberg report saying that some copper importers have requested a delay in shipments due to builds in bonded warehouse stocks.

“How quickly end-use demand picks up during the upcoming seasonally stronger period and how quickly this metal can be consumed will determine how long China’s copper imports weaken for and, ultimately, whether the strength in LME prices can be sustained,” Barclays added. China is the world’s largest consumer of copper.

‘LME Copper declines but not expecting further sharp drop’

LONDON (Commodity News World): London Metal Exchange copper prices weakened Friday, but doesn’t not look for a sharp sell-off, said Triland Metals in a research note.

Triland points out that while Shanghai Futures Exchange copper stocks rose 5,401 metric tons, LME stocks have been falling, declining by 3,250 tons Friday alone, with a “good amount” of this happening in the U.S.

“There seems to be some demand there and physical premiums are rising. The prices did not move higher today, maybe indicating some technical weakness, but the fundamental side should be strong enough to prevent a sharp drop. A strike at First Quantum's Zambian copper mine should provide support,” Triland added.

LME copper closed down $49 at $8,580 a metric ton.