Little change for red metal

Rising stockpiles and fluctuating dollar try to impact the prices

Copper prices fell slightly at Comex on Monday, 07 December, 2009. Prices dropped for the third straight day today. Prices fell on speculation that the dollar will turn strong in the next few days. Rising stockpiles and weak demand outside China are also causing prices to soften in recent times.

At USA, copper futures for March delivery ended lower by 2.85 cents (0.9%) to 3.209 a pound. Earlier, price fell by almost 2.5%. Last week, copper ended higher by 3.6%. Copper ended November 2009 higher by 6.6%. On a year to date basis, copper has climbed 122%.

On the London Metal Exchange, copper for delivery in three months ended lower by $41 (0.6%) at $6,999 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

In the currency market on Monday, the dollar headed strongly up initially. But then, the dollar erased its gains against the euro after Bernanke's speech. It earlier rose to the highest levels versus the euro in more than a month, extending Friday's rally in the wake of a surprisingly strong U.S. employment report for November. The dollar index, which measures the strength of the dollar against a basket of six other currencies, then fell by almost 0.4%. Year to date, the dollar index has dropped by almost 7%.

The dollar erased its gains after Bernanke said at midday the central bank will eventually have to raise interest rates, but he emphasized that that time could be far away as the economy faces "headwinds."

Also, as per latest reports, copper inventories monitored by the London Metal Exchange are up 33% this year to 452,550 tons. Rising stockpiles and weak demand outside China are also causing prices to soften in recent times.

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 330.25/Kg. The closing price was Rs 1.4/Kg (0.42%) lower than previous closing price. Prices rose to a high of Rs 331/ Kg and fell to a low of Rs 329.25/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead dropped 0.5% to $2,354 a ton and zinc dropped 0.2% to end at $2,365 a ton. Nickel was little changed at $16,005. Aluminium fell 0.5% at $2,138 a ton.