Industrial metals lost some groundearly in thesession but settledoff early lows on FOMC outlook for the U. S. economy. Copper prices closed down 2 percent on Wednesday as investors briefly took their eyes off the U. S. dollar, focusing on China's eroding demand for the industrial metal.

IN FOCUS:

China may be holding nearly 1.2 million tonnes of refined copper stocks, or about 80 days of consumption, according toa Chinese state-backed research group. The estimated stocks included the State Reserves Bureau's purchase of 235,000 tonnes. The stocks were estimated around 670,000 tonnes in May and 735,000 tonnes in July.

Estimate suggests some 860,000 tonnes of refined copper are stored in private stocks, given that Shanghai Futures Exchange's warehouses housed 104,248 tonnes as of last Friday and the SRB's buying accounted for 235,000 tonnes.

Inventories of copper have been trending higher since early July at warehouses tracked by the London Metal Exchange, reversing constant falls seen earlier in the year. On Tuesday, LME copper stocks rose another 175 tonnes to 331,950 tonnes.

FUNDAMENTAL OUTLOOK:

Industrial metals may trade down today as the recent rally seems to be overdone. This rally does not look sustainable only on the back of weaker dollar. Weakness in shipping activities along with demand concerns is expected to pressurize prices in this complex. We recommend selling on rise.