Copper pares early gains

Prices drop as inventories pile up

Copper prices continued to fall on Friday, 11 September, 2009 at Comex and LME. Prices fell to on e week lows as inventories piled up at Shanghai.

At USA, copper futures for December delivery fell 3 cents (1%) to 2.865 a pound. Earlier, during the day, copper rose by almost 1.4%. Copper fell 0.7% for the week. Copper ended August, 2009, higher by 7%.

On the London Metal Exchange, copper for delivery in three months ended lower by $44 (0.7%) at $6,250 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 92%.

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 monitored by the Shanghai Futures Exchange climbed 12% this week to 97,396 metric tons, the most 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 Friday, the dollar index, which measures the strength of dollar against a basket of other currencies, fell by 0.2%. The dollar fell against the euro to a fresh one year low.

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.

Among other metals traded in the LME on Friday, lead gained 1.9% to $2,150 a ton and zinc gained 1.3% to end at $1,935 a ton. Nickel gained 0.85% to end at $17,405. Aluminium rose marginally to $1,856 a ton.