BASE METALS: Comex Copper Slides 4.7% On EU Fears
14 Dezember 2011 - 8:45PM
Dow Jones News
Copper futures plunged to their lowest levels in almost three
weeks on Wednesday as escalating worries about Europe's debt crisis
sent investors cashing out of the industrial metal.
The most actively traded contract, for March delivery, fell
16.30 cents, or 4.7%, to settle at $3.2785 pound on the Comex
division of the New York Mercantile Exchange. That's the lowest
settlement for the most widely traded contract since Nov. 25.
Copper tracked the euro lower as the common currency dropped
below the key $1.30 level and hit an 11-month low. Italy's
borrowing costs climbed to euro-era highs, raising concerns that
the euro-zone's third-largest economy won't be able to manage its
debt load.
Copper is sensitive to the economic outlook because of its
widespread uses in construction and manufacturing. Prices have
tracked investor sentiment toward Europe's debt crisis on the view
that a credit crunch there could hit world demand for raw
materials.
"The big fear is where is demand going to come from for metals
products?" said Frank Lesh, a broker with FuturePath Trading.
"World economies are indeed slowing."
Crude oil futures also fell sharply, and Comex gold settled down
4.6%, breaking below $1,600 a troy ounce.
Copper fell on Tuesday, and extended its losses in
post-settlement trade after the Federal Reserve held to its
previously announced policies, disappointing market participants
hoping the central bank would take steps to boost the economy.
Traders have "resigned themselves to the fact that the
(euro-zone) crisis is as bad as its ever been, the real global
economy is slowing and the cavalry, be they the Chinese or the Fed,
are still preoccupied with their own problems," said Leon Westgate,
an analyst with Standard Bank, in a note.
World copper production outstripped supply by 343,400 tons
during the first 10 months of the year, the World Bureau of Metal
Statistics said Wednesday, up from a 236,800-ton surplus recorded
through September.
Many market participants at the beginning of the year forecast a
large deficit in the global copper market in 2011, and that
expectation helped send prices to record highs in February before
slumping economic growth took a toll on demand.
The copper market can expect a further boost to supply after the
resolution of a high-profile labor strike that had stopped
production at one of the world's top copper mines.
Freeport-McMoRan Copper & Gold Inc. (FCX) said on Wednesday
that the company had reached an agreement with striking workers at
its Indonesian unit. Copper shipments from Freeport's Grasberg mine
were suspended in October, and the company said it expected a
return to full operations early next year.
Copper settlements (ranges include electronic and pit trading):
Dec $3.2710; down 16.15 cents; Range $3.2520-$3.4095
Mar $3.2785; down 16.30 cents; Range $3.2565-$3.4260
-By Matt Day, Dow Jones Newswires; 212-416-4986;
matt.day@dowjones.com
--Francesca Freeman contributed to this article.
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