Copper drops

Prices shed gains as inventories soar

Copper prices slipped on Thursday, 17 September, 2009 at Comex and LME. Prices fell today following two previous sessions of rise. Prices slipped due to rising inventories at LME.

At USA, copper futures for December delivery fell 3 cents (1%) to 2.9 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 $35 (0.6%) at $6,385 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 95.5%.

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

As per latest report, stockpiles tallied by the London Metal Exchange expanded for a 14th day to 323,225 metric tons yesterday, the highest level since 26 May, 2009. Copper inventories in Shanghai climbed for a seventh week last week to a two-year high of 97,396 tons.

The dollar, which has served as a safe-haven asset over the past year because of its low yield, fell earlier today. But then, it reversed its course. The dollar index, which measures the strength of dollar against a basket of other currencies, rose by 0.4%.

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 308.25/Kg. The closing price was Rs 5.05/Kg (1.61%) lower than previous closing price. Prices rose to a high of Rs 313.2/ Kg and fell to a low of Rs 307.35/Kg during the day's trading.

Among other metals traded in the LME on Thursday, lead rose 1.2% to $2,320 a ton and zinc fell 0.3% to end at $1,830 a ton. Nickel rose 1.7% to end at $17,599. Aluminium rose 0.7% to $1,940 a ton.