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Copper prices fall after data shows a jump in LME inventories

Prices of copper eased slightly Tuesday, after data showed that stocks on the London Metal Exchange had increased. Meanwhile, expectations of rate reductions in the United States as well as concerns about a possible disruption to supplies from Chile restricted selling.

Benchmark copper traded on the LME 0.5% lower, at $9.642 per metric ton, from a session high of $9.747.5.

Copper stored in LME-registered warehouses The total amount of coal produced in June increased by 14275 tons to reach 153,850 tonnes, a 70% increase.

Producers, consumers, and traders usually place their excess metal on LME warrants - a document that confers ownership.

Traders believe that the copper delivered to LME's warehouses was likely produced in China. China is the largest copper consumer worldwide, and accounts for around half of the global consumption, estimated at 26 million tons. Market attention is also on Codelco’s El Teniente Copper Mine, where operations have been halted after six people died in an earthquake last weekend.

El Teniente produced 356 tons of copper in the last year.

The impact on the market would depend upon the duration of the shutdown, which is not yet known.

The unexpectedly weak U.S. job data released last week led to bets that the Federal Reserve would cut interest rates in September, causing the U.S. Dollar to weaken, and making metals priced in dollars, like copper, more affordable for holders of foreign currencies.

Around $9,730 is where the 21-day and 50-day moving averges converge.

Copper prices will be determined by China's demand in the long term.

"Chinese consumers have been living on the edge, and haven't been reducing stock." Marcus Garvey, Macquarie analyst, said that at higher prices they did export some metal.

Garvey said that the LME will find a bottom when Chinese buyers return.

Aluminium rose 0.5% to $2 566 per ton. Zinc increased 0.6% to 2 767. Lead was up by 0.3% to $1 964. Tin fell 0.1% to 33,185. Nickel dropped 0.8% to 14,950. (Reporting and editing by Barbara Lewis; Pratima Dasai)

(source: Reuters)