Copper drops the most in five weeks

Soaring LME inventory takes toll on red metal price

Copper prices dropped the most in five weeks on Monday, 28 September, 2009 at Comex and LME. Prices fell today once again on back of soaring LME inventories.

At USA, copper futures for December delivery slid 1.35 cents (0.5%) to 2.727 a pound. Copper fell 1.6% last week. Copper ended August, 2009, higher by 7%.

On the London Metal Exchange, copper for delivery in three months ended higher by $35 (0.3%) at $6,010 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 89%. In September, prices are headed for the first monthly drop in FY 2009.

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

In the currency market on Friday, the dollar remained extremely volatile. The dollar index, which measures the strength of dollar against a basket of other currencies, rose by almost 1.5% earlier during the day but then erased most of its gains.

As per latest reports, copper stockpiles in warehouses monitored by the London Metal Exchange rose 1.1% to 344,350 metric tons, the highest since 19 May, 2009. They have climbed 15% in September.

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.