Copper drops from year high levels

Prices drop after four consecutive sessions of rally

Copper prices fell from a year high level at Comex on Wednesday, 09 September, 2009. Prices fell after four consecutive sessions of rally after inventories rose and a larger-than-estimated plunge in U.S. consumer borrowing cast doubt on the strength of the economic recovery.

At USA, copper futures for December delivery fell 3.2 cents (1.1%) to 2.924 a pound. Copper fell 2.8% last week. Copper ended August, 2009, higher by 7%.

On the London Metal Exchange, copper for delivery in three months ended lower by $60 (0.9%) at $6,415 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 93%.

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 of copper monitored by the London Metal Exchange rose 0.4% today to the highest since May. Also, consumer credit fell for a sixth month in the U.S., the longest decline since 1991, as banks curbed lending.

In the currency market today, the U.S. dollar fell to a new yearly low. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by 0.5% but ultimately settled lower by 0.3%.

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 312.5/Kg. The closing price was Rs 3.3/Kg (1.04%) lower than previous closing price. Prices rose to a high of Rs 317.6/ Kg and fell to a low of Rs 310.5/Kg during the day's trading.

Among other metals traded in the LME on Wednesday, lead fell 2% to $2,405 a ton and zinc fell 1.2% to end at $1,956 a ton. Nickel rose 0.3% to end at $18,000. Aluminium fell 0.5% at $1,885 a ton.