Lead Falls to 16-Month Low in London After Stockpiles Double

July 2 (Bloomberg) - Lead fell to the lowest in 16 months on the London Metal Exchange after stockpiles more than doubled, indicating oversupply. Copper rose to the highest in more than two months.

LME-tracked inventories have more than doubled this year, piling up at warehouses in Europe, Asia and the U.S. and signaling the market will switch into a surplus, according to Michael Widmer, an analyst at Lehman Brothers Holdings Inc.

"One important reason is seasonally weak demand," Widmer said today by phone from London. "The market looks relatively well supplied at the moment."

Lead for delivery in three months fell $57, or 3.2 percent, to $1,708 a metric ton as of 4:51 p.m. The contract earlier traded at $1,695, the lowest intraday price since Feb. 14, 2007. All LME-traded metals declined, paced by a slide in zinc.

Lead, mostly used in car batteries, has fallen 32 percent this year, the biggest decline on the LME. Supply will exceed demand by 30,000 tons this year, widening further next year, Widmer said.

Zinc fell as much as 3.8 percent to $1,854.75 a ton, the biggest intraday loss since June 19. Zinc and lead have the same oversupply problem, Widmer said.

Copper rose to the highest in more than two months on concern that a strike would spread in Peru and hurt supply from the world's third-largest source of the metal. The benchmark contract added $107.50, or 1.3 percent, to $8,720 a ton, the highest intraday price since April 23.

Miners from Freeport McMoRan Copper & Gold Inc.'s Cerro Verde copper mine voted to join the nationwide strike in Peru today, according to Luis Castillo, general secretary of the Mining Federation. Copper has gained 2.3 percent since the protest, the third in less than 14 months, began June 30.

Copper Stockpiles

Copper inventories monitored by the LME rose 0.1 percent to 122,475 tons, taking this year's decline to 38 percent. Including those monitored by exchanges in New York and Shanghai, stockpiles totaled 164,787 tons, or 3.2 days of global consumption, Bloomberg calculations showed. Last year's average was 4.9 days.

Among other LME-traded metals, aluminum increased $40 to $3,195 a ton. Nickel lost $300 to $21,250 a ton and tin fell $400 to $23,200.