Copper dips as LME, SHFE stockpiles edge higher

Copper edged lower after both the London Metal Exchange and the Shanghai Futures Exchange said their stockpiles of the red metal rose this morning, alleviating fears a supply shortage could be imminent. But base metals prices were relatively steady across the board, benefiting from the slightly firmer tone of the equities markets, whose volatility has driven prices lower in recent days. 'The base metals market has been susceptible to picking up vibes from the wider markets,' said William Adams, an analyst at BaseMetals.com, adding that more stable equity markets 'will lend some stability and support to prices'. Copper prices weakened slightly this morning after the LME posted a 2,225-tonne rise in its stockpiles of the metal, bringing its total inventories to 105,650 tonnes. Meanwhile, the Shanghai Futures Exchange said its copper inventories rose by 1.63 pct to 91,563 tonnes this week. Fears over falling stockpiles of the red metal have fuelled price rises in recent months. At 9.58 am, LME copper for three-month delivery was trading at 7,850 usd, up from 7,875 usd at the close yesterday. Meanwhile, nickel slid to a fresh eleven-month low this morning with a further build in LME-monitored stockpiles of the metal, illustrating the ongoing oversupply in the market, which has added to faltering demand from stainless steel manufacturers to drive prices lower in recent months. Prices dipped as low as 29,200 usd, before recovering to trade at 29,300 usd against 29,900 usd yesterday. The metal could trend lower if fundamentals remain weak, with technical support unlikely to staunch losses until prices reach around 25,500 usd, analysts said. 'The support at the Bollinger band and the low from November 2006 at 28,800 usd is probably not a strong one,' noted Peter Fertig, a consultant to Dresdner Kleinwort. Among other metals, lead edged up to 3,300 usd from 3,230 usd yesterday, zinc was trading at 3,465 usd against 3,476 usd, and aluminium was steady at 2,718 usd against 2,720 usd. Tin meanwhile trod water at 16,050 usd against 16,100 usd. The metals are likely to remain steady ahead of US economic data out later today, including non-farm payroll numbers and the July jobless rate, analysts said. The market will be watching the numbers for pointers as to future metals demand from the US, the world's largest consumer of base metals after China. Recent weakness in the US housebuilding sector in particular has raised concerns that demand may ease, potentially pushing prices lower.