Bloomberg Copper Falls From Seven-Month High as Demand Eases After Rally

June 2 (Bloomberg) -- Copper fell from the highest in seven months on speculation that the price increased too fast, outpacing demand.

Copper has surged 63 percent this year, partly because China, the world’s biggest user of the metal, bought supplies for its national reserves. European and U.S. demand remains slack, analysts said.

“The upward move in prices during the last few days has been phenomenal,” said Alex Heath, the head of industrial metals trading at RBC Capital Markets in London. “People question the speed of the recovery.”

LME Inventories

Stockpiles of copper in warehouses monitored by the London Metal Exchange slid for an 18th straight session to 309,225 metric tons, the lowest since Dec. 12. Inventories have declined 44 percent from a high this year on Feb. 25.

“The price hike has predominantly been driven by China’s reserve purchases and hopes of an imminent economic turnaround,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a report.

The rally may stall, “given that demand remains weak,” Weinberg said. There may be “a massive correction of copper prices soon,” he said.

Copper for delivery in three months fell $25, or 0.5 percent, to $5,050 a ton ($2.29 a pound) on the LME.

In London, aluminum was little changed at $1,472 a ton. Nickel dropped 0.2 percent to $14,620, and tin eased 1 percent to $14,500. Lead was steady at $1,659, and zinc declined 1.9 percent to $1,580. more...