Shanghai copper fell nearly 1 percent on Friday on weakness in London futures in the previous session after stocks jumped nearly 5 percent following large-scale deliveries into warehouses in South Korea.
London Metal Exchange inventories rose 5,400 tonnes to 119,600 tonnes on Thursday after deliveries of 6,550 tonnes into warehouses in South Korea, and traders said more metal was expected.
"The material that went into Korea was from Poland, originally intended for China, but diverted due to the negative arbitrage which is running at around $400 a tonne," an LME trader said, referring to the price difference between London and Shanghai.
"Another 15,000 tonnes is expected to be delivered over the next week or so." Copper for delivery in three months on the London Metal Exchange was $30 higher at $7,475. Copper dipped on Thursday to $7,405 from just below $7,600 prior to the stock data.
The most-active September copper contract on the Shanghai Futures Exchange was down 560 yuan or 0.9 percent at 64,280 yuan ($8,439). Spot copper in Shanghai was 62,900 to 63,250 yuan, down 475 yuan from Thursday. "There is some support below 64,000 yuan as traders are hesitant to push the price down further on concerns about lower Shanghai stocks this week," said analyst Yang Jun at China Futures.
Weekly Shanghai stocks are tipped to fall by between 3,000 and 6,000 tonnes when data is released later on Friday. Stocks in Shanghai warehouses have risen almost fourfold to just under 100,000 tonnes as domestic consumers struggle to deal with record imports this year.
Chinese customs data showed refined copper imports in May were 116,749 tonnes, up nearly 150 percent year-on-year, but 37 percent down from April. Imports in the first five months of the year were 786,441 tonnes. China's net refined copper imports in the first five months of the year are already 30 percent higher than net imports for the whole of 2006. A raft of strike threats was also underpinning prices, with most of the market's attention directed at Chile, the world's largest copper producer.
Workers at Collahuasi, one of the world's largest copper mines, have set a strike vote for June 27 and elsewhere in the country, sub-contractors at state-owned miner Codelco will meet with the company to discuss demands for better working conditions.
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