METALS-Copper slips as LME stockpiles climb to 11-month high

By Polina Devitt

LONDON, Feb 17 (Reuters) - Copper prices fell on Tuesday as a stronger dollar and rising inventories in London Metal Exchange-registered warehouses weighed on the market amid thin trading volumes due to the Chinese Lunar New Year holiday.

Benchmark three-month copper on the London Metal Exchange CMCU3 was down 1.8% at $12,619 a metric ton by 1702 GMT after hitting $12,586, its lowest since February 6.

The metal, used in power and construction, is now down 13% from a record high of $14,527.5 hit on January 29 on a wave of speculative buying, encouraged by expectations of strong demand.

The record-high prices muted demand in top metals consumer China and added to the 2025 stockpiling in the United States, driving combined copper stocks of the three exchanges - the LME, the Shanghai Futures Exchange, and U.S. Comex exchange - to more than one million tons for the first time in more than two decades.

Copper inventories in the LME system reached an 11-month high of 221,625 tons after 9,975 tons were delivered to LME-registered warehouses in the U.S., South Korea and Taiwan, daily LME data showed.

What matters next is how China reacts once it returns from holiday on February 24 and whether these inventories start to decline, said Alastair Munro, metals strategist at Marex.

The discount on the LME cash copper contract to the three-month contract CMCU0-3 widened to $114 a ton on Monday, its highest level in a year, indicating ample nearby supply. This marks a sharp reversal from a premium of $102 on January 20.

The discount was last at $109 on Tuesday.

In other metals, lead CMPB3 lost 0.5% to $1,947 a ton after hitting a two-month low of $1,943.8 with the LME stocks jumping to 287,125 tons, highest since June, as 54,675 tons were delivered to warehouses in Singapore.

Aluminium CMAL3 fell 0.7% to $3,032, zinc CMZN3 eased 0.1% to $3,286.50, nickel CMNI3 slid 1.6% to $16,830, while tin CMSN3 rose 0.3% to $45,340.