Metals- Copper sinks as stockpiles rise on LME

LONDON (AFX) - Copper prices sank after the LME reported yet another large rise in inventories, which have more than doubled since the start of last year.Falls were limited, however, by continued speculation Chinese buyers will return to the market this year after heavy destocking kept them at bay in 2006.At 11.15 am, LME copper for three-month delivery was down at 5,670 usd a tonne against 5,810 usd at the close yesterday.The LME said in a daily report earlier that copper stocks held in its warehouses rose by 5,975 tonnes to total 213,675 tonnes. Copper stocks are heading comfortably above the crucial 200,000 tonne level, above which they are no longer considered critical.However, Standard Bank analyst Michael Skinner noted that while stocks are piling into warehouses in Europe, they are steadily leaving Asian warehouses."The stock movement reflects our view that Chinese buying is on the increase and we look for this to continue over the medium term," he said.Chinese copper imports rose by an annual 59.4 pct in December. Traders speculate the sharp rise came as a result of consumer restocking.Chinese copper stocks were run down through most of last year as buyers stayed out of the market on account of the high copper prices.By the end of 2006, Chinese destocking helped knock copper some 30 pct off an all time high of 8,800 usd a tonne, reached in mid-May."With China reporting apparent refined copper consumption growth in excess of 15 pct in 2006 it seems the market may have been led into a false sense of security recently as destocking masked the real level of demand," said BaseMetals.com analys William Adams.