From Reuters via MineWeb:
With Shanghai copper inventories rising 51% in the past week, prices took a major tumble today as investors worried about excess supplies.
Shanghai copper fell nearly 2 percent on Monday, on a stronger dollar and investor worries about a supply overhang as China enters the low season for copper consumption.
Data last week showed that U.S. job losses in May were the fewest since September and far smaller than expected, prompting hopes that the recession is diminishing, which should be good news for copper.
But the dollar's surge on the news, which continued into Monday, and a rise in the unemployment rate to 9.4 percent, the highest since July 1983, has put a dampener on the industrial metal.
The U.S. dollar edged up further on Monday, as U.S. Bond yields rose to seven-month highs.
"The dollar and oil have become the dominant factors in the market. If copper demand does not show much improvement, these factors will continue to play an important role," said Zeng Chao, an analyst with Everbright Futures....
..."The remarkable rise in stockpile signals that pressure from growing supply on prices has emerged. Demand will continue to weaken as the low season starts, and we have seen new short positions established," said Li Rong, an analyst with Great Wall Futures.
Last week Shanghai copper posted a 10.5 percent weekly rally, which analysts and traders attributed to plenty of liquidity in the market. In the short term, the liquidity will keep the market bullish, despite the lack of support from fundamentals, they said....