Copper drops

Rising inventory and firm dollar hammer prices

Piling inventories at LME and firm dollar pushed copper prices lower at Comex and LME on Tuesday, 22 December 2009. The strong housing data also failed to boost copper price.

At USA, copper futures for March delivery ended lower by 2.05 cents (0.6%) to 3.138 a pound. Last week, copper remained almost unchanged. Copper ended November 2009 higher by 6.6%. On a year to date basis, copper has climbed 115%.

On the London Metal Exchange, copper for delivery in three months ended lower by $54 (0.8%) at $6,881 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

Latest reports showed that inventories tallied by the London Metal Exchange rose 0.3% today to 480,900 metric tons. Global supplies, monitored by the LME and exchanges in Shanghai and New York, have surged 74% this year.

In the currency market on Monday, the greenback started the day in the mixed mode. Then, the dollar's move caused a pullback in commodity prices. The dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.2%.

The National Association of Realtors in US reported on Tuesday, 22 December 2009 that resale of U.S. homes increased by 7.4% to 6.54 million in November, 2009.

The sales pace was the highest since February 2007 and was the third-straight large increase in existing home sales. Sales are up 28% since August. The report also stated that sales are up a record 44.1% in the past year, reflecting a recovery in the housing market after the sharpest downturn in decades.

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

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 February delivery closed at Rs 326.6/Kg. The closing price was Rs 1.75/Kg (0.53%) higher than previous closing price. Prices rose to a high of Rs 328/Kg and fell to a low of Rs 324.4/Kg during the day's trading.

Among other metals traded in the LME on Tuesday, lead was almost unchanged at $2,350 a ton and zinc fell marginally to end at $2,430 a ton. Nickel gained 2.3% to end at $17,775. Aluminium fell marginally to end at $2,242 a ton.