METALS-Mounting supply base drags copper to lower close
* Copper stocks more than double levels in July
* Nickel stocks hit record 161,994 tonnes (Recasts with U.S. closing price, comments; adds NEW YORK dateline/byline)
By Chris Kelly and Pratima Desai
NEW YORK/LONDON, Jan 15 (Reuters) - Copper prices trickled to a weaker finish on Friday, under pressure from a firmer dollar and incessant inventory builds in exchange-monitored warehouses that fanned concerns about near-term demand prospects.
Benchmark copper for March delivery HGH0 on the New York Mercantile Exchange's COMEX division shed 2.15 cents to close at $3.3660 per lb, near the bottom of its $3.3480 to $3.4260 session range.
On the London Metal Exchange, copper for three-month delivery MCU3 ended down $60 at $7,430 a tonne. The metal, used in power and construction, touched $7,796 a tonne on Jan. 7, its loftiest level since August 2008.
One reason for the price pull-back has been the accelerated pace of inventory builds in recent weeks, analysts said.
Stocks of copper in LME warehouses at 525,475 tonnes are the highest since the middle of February and more than double the level in July.
For graphic on global copper stocks click here
"The market is drifting because some people don't like seeing these increases in stocks," said Justin Lennon, analyst with Mitsui Bussan Inc. "From a near-term perspective it looks like there's a lot of supply, but, historically speaking it's not that much."
LME copper warehouse stock levels peaked at 1.5 million tonnes in 2001.
Longer term, the market would continue to experience a tighter supply/demand balance, Lennon said, pointing to the 2010 copper treatment and refining charges of $46.50 a tonne, or 4.65 cents a lb, agreed upon between BHP Billiton Plc/LTD (BHP.AX) (BLT.L) and Japanese and Chinese smelters. [ID:nTOE60E02H]
"Its reflective of the state of copper supply and the fundamental shortage of concentrate," he said.
Further price pressure was seen from the dollar, which rose against the euro after U.S. data showed a rise in manufacturing and tame consumer prices last month, making dollar-priced metals costlier for non-U.S. investors. [USD/] [ID:nN14198653]
In-line U.S. industrial production data [ID:nN15218367] and upbeat manufacturing growth in New York State [ID:nN15208010] failed to have any significant impact on prices.
Analysts noted record high nickel stocks, which at 161,994 tonnes have more than doubled over the past year as supplies outstripped demand from stainless steel producers.
"Nickel more than any other base metal takes account of fundamentals ... it's heading up to be the worst market because the stainless steel market is in a pretty poor state," said Dan Smith, analyst at Standard Chartered. [ID:nLDE60B1B4]
Three-month nickel MNI3 ended at $18,600 a tonne, compared with $18,300 at the close on Thursday, and aluminum MAL3 ended at $2,306 a tonne, down from $2,335.
Stocks of aluminum, used in transport and packaging, at 4.58 million tonnes are within reach of record highs. But prices have been supported by financing deals, which have tied up about 70 percent of LME stocks until May at least. [ID:nGEE5BA277]
Also in the spotlight are canceled warrants -- material earmarked for delivery -- on aluminum stocks, which at more than 251,000 tonnes is nearly 20 percent of the remaining 30 percent not tied up in deals.
For graphics on aluminum stocks click on [ID:nSGE60E0DO]
Battery material lead MPB3 ended at $2,440 a tonne, down from $2,507 on Thursday, zinc MZN3 ended at $2,470, down from $2,502, and tin MSN3 closed at $18,100, down from $18,450.
Traders said tin prices would be supported by a crackdown on illegal mining in Indonesia, the world's second largest producer after China. [ID:nJAK102197]
Metal Prices at 2:03 p.m. EST (1903 GMT) Metal Last Change Pct Move End 2009 Ytd Pct
move COMEX Cu 336.35 -2.40 -0.71 334.65 0.51 LME Alum 2300.00 6.00 +0.26 2230.00 3.14 LME Cu 7390.00 -100.00 -1.34 7375.00 0.20 LME Lead 2430.00 -77.00 -3.07 2432.00 0.08 LME Nickel 18560.00 260.00 +1.42 18525.00 0.19 LME Tin 18050.00 -400.00 -2.17 16950.00 6.49 LME Zinc 2450.00 -52.00 -2.08 2560.00 -4.30 SHFE Alu 17405.00 -15.00 -0.09 17160.00 1.43 SHFE Cu* 60480.00 -300.00 -0.49 59900.00 0.97 SHFE Zin 20290.00 -135.00 -0.66 21195.00 -4.27 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional reporting by Maytaal Angel in London; Editing by Walter Bagley)
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