Copper prices fall amid rise in LME stocks, lead hits new record

Copper prices fell after the LME reported a surprise rise in inventories of the metal, and as markets digested the news that production at Codelco's Andina mine in Chile is returning to normal. Meanwhile, lead hit another all-time record high as ongoing worries over supply disruptions in Australia and falling Chinese exports fuelled speculative buying. At 10.41 am, LME lead for three month delivery was trading at 3,090 usd a tonne against 3,025 usd at the close Friday, having earlier hit a fresh all time record of 3,125 usd. Calyon analyst Michael Widmer said there is nothing new driving lead and that the continued under-performance of Chinese exports of the metal are pushing it to ever higher levels. On Friday, Calyon raised its 2007 price forecast for the heavy metal to 2,620 usd per tonne from 1,830 usd, and its 2008 forecast to 2,660 usd from 1,700 usd. In other metals, LME copper for three-month delivery fell to 7,820 usd a tonne against 7,880 usd at the close Friday. The LME said in a daily report earlier copper stocks held in its warehouses rose by 1,325 tonnes to total 98,875 tonnes. The news helped ease worries over ever-declining LME inventories, which fell on Friday to their lowest levels in almost a year. Elsewhere, news that production at Codelco's Andina mine was returning to normal also weighed on prices, even though protests are continuing at other Codelco operations. Codelco, the world's largest copper producer, has yet to resolve its dispute with sub-contracted workers, who remain on strike over pay and work conditions. Meanwhile, the copper market remains beset by strike action elsewhere in the Americas. Xstrata's CCR copper refinery in Montreal is operating at around a quarter of capacity due to a strike that began on June 11, while the dispute at Southern Copper Corp's facilities in Peru is still not resolved. Meanwhile in Mexico, the market is waiting to see weather workers at the Cananea mine will vote to strike later today. The mine, owned by Grupo Mexico, is the country's biggest copper producer. Calyon analyst Michael Widmer said while copper remains underpinned by worries over supply disruptions in the Americas, he believes the market 'does not look as strong at the moment as it did a week ago'. Two strikes have been resolved since last week. In Chile, workers at the Collahuasi mine voted to end their four-day strike on Friday, while the strike at Zambia's Kansanshi mine was also called off last week. Added to this, there are rumours that the Chinese are starting to export copper because of the price differential between Shanghai and LME copper, and because they have imported too much of the metal this year. 'They can earn money by exporting the copper that they didn't need and there's rumours the metal is coming into exchanges', noted Calyon's Widmer. He conceded, however, that Chinese copper imports remain strong overall and that they are one of they key drivers behind the near-25 pct gain in copper prices in the year to date. Just today, data out from China showed that while copper imports fell in June, the fall was not as much as the market had been expecting, considering the record levels of imports in the year to date. In other metals traded, nickel was down at 31,700 usd a tonne against 32,600 usd, tin was flat at 14,200 usd, while zinc fell to 3,490 usd a tonne against 3,591 usd. Aluminium edged up to 2,799 usd a tonne against 2,792 usd.