Copper continues to plunge

Prices drop as dollar strengthens and inventories pile up

Copper prices continued to fall on Monday, 14 September, 2009 at Comex and LME. Prices fell as inventories piled up at LME. The relatively strong dollar also pulled down red metal prices.

At USA, copper futures for December delivery fell 4.2 cents (1.5%) to 2.8045 a pound. Copper fell 0.7% last week. Copper ended August, 2009, higher by 7%.

On the London Metal Exchange, copper for delivery in three months ended lower by $110 (1.8%) at $6,140 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

After August, it was the eighth straight monthly gain for copper. Prices gained 23% in the second quarter. On a year to date basis, prices are higher by 90.5%.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.

As per latest reports, stockpiles tracked by the London Metal Exchange gained 0.5% today to 319,800 metric tons. The same is up 7% this month. In Shanghai, they rose 12% last week to 97,396 tons, the highest since June 2007. The price of the metal has doubled this year, driven by record purchases by China in the first half.

In the currency market on Monday, the dollar index, which measures the strength of dollar against a basket of other currencies, rose by 0.4%.

In its latest report, Goldman Sachs reported that it has forecast copper to reach $7,650 a ton at the end of 2010.

In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.

At the MCX, copper for November delivery closed at Rs 301.6/Kg. The closing price was Rs 2.4/Kg (0.8%) lower than previous closing price. Prices rose to a high of Rs 303.5/ Kg and fell to a low of Rs 297.8/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead dropped 1.9% to $2,025 a ton and zinc slid 3% to end at $1,809.75 a ton. Nickel shed 3.5% to end at $16,350. Aluminium fell 1.8% to $1,812 a ton.