--Comex September copper down 1.4% to $3.0565
--China CPI climbs 2.7% in June, fans worries of PBOC action
--New copper shipments from Mongolia, Indonesia renew fears of a
supply glut
By Sarah Jacob
NEW YORK--Copper futures fell Tuesday amid rising supply of the
metal and as higher-than-expected inflation in China raised
concerns about slowing demand.
The most-actively traded contract, for September delivery, was
recently down 4.35 cents, or 1.4%, at $3.0565 a pound on the Comex
division of the New York Mercantile Exchange.
Chinese consumer prices in June rose 2.7% on the year, higher
than forecasts of 2.5% and above the 2.1% increase in May.
Copper traders are worried that the increase in inflation will
prompt the People's Bank of China to raise interest rates, thereby
slowing economic growth and demand for copper. China accounts for
about 40% of global copper demand, and the metal is widely used in
manufacturing and construction among other economic sectors.
"The uptick in Chinese inflation is putting pressure on copper,"
said Bob Haberkorn, senior commodities broker at RJO Futures.
"Traders are looking at whether the People's Bank of China will
make moves to tame inflation."
Copper prices were also under pressure as more supply of the
metal headed for the physical market. Anglo-Australian mining
company Rio Tinto PLC (RIO) began exporting copper concentrate, a
form of crushed up copper ore, from its Oyu Tolgoi copper-gold mine
Tuesday. The company's shipments, which were due to begin in June,
were held up by protracted negotiations with the Mongolian
government.
Freeport McMoRan Copper & Gold Inc. (FCX), the world's
largest listed copper mining company, on Tuesday resumed copper
concentrate shipments from its Grasberg mine in Indonesia. The
shipments come two months after a tunnel collapse that killed 28
workers suspended mining activity at one of the world's largest
copper mines.
"Markets are growing concerned over Chinese demand growth and
major operations resuming/starting," said S.P. Angel analyst John
Meyer.
Copper traders have been increasingly worried that supply from
the world's mines will exceed demand for the metal this year,
marking the first time since 2009 that the global copper market
reaches a supply surplus.
Copper futures were also weaker due to a stronger U.S. dollar.
The ICE Dollar Index, a measure of the dollar against a basket of
currencies, was recently up 0.2% at 84.32.
Copper is denominated in U.S. dollars, and a stronger dollar
makes copper more expensive for overseas buyers who hold foreign
currencies.
-Francesca Freeman contributed to this article.
Write to Sarah Jacob at sarahann.jacob@dowjones.com