Copper tarnishes

Higher Chilean production pushes prices down

Red metal prices ended lower at Comex on Thursday, 29 April 2010. News about Chile increasing copper production hammered prices today. Prices dropped at LME too.

At USA, copper futures for July delivery ended marginally lower by 4 cents (1.1%) at $3.3505 a pound on Thursday. Last week, prices lost 1.9%. In March, copper gained 7.5%. Copper gained about 6% for the first quarter, buoyed by data from the U.S. and other countries reinforced expectations that the global economic recovery was on track. On a year to date basis, in 2010, copper is higher by 1.7%.

Prices have increased by almost 72.5% in the past twelve months due to higher imports from China. Copper ended FY 2009 higher by 140%.

On Thursday, at LME, copper for delivery in three months ended lower by $45 (0.6%) at $7,355. Prices had crossed the $8,000 mark for first time since 2008 on 6 April. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

As per latest reports, Chile produced 451,127 tons of copper in March, 5% higher than in March 2009, showing that the February earthquake had only minimal effects on the mining sector and the sharp rally of copper prices was not justified fundamentally.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by 0.4%. The euro rebounded against the dollar today. Concerns over spreading contagion to other European countries lessened somewhat on reports that officials were considering a multi-year rescue package for Greece that could total more than 100 billion euros ($133 billion), compared to prior plans for a one-year aid package of roughly 45 billion euros.

The Labor Department in US reported on Thursday, 29 April 2010 that the number of people filing initial claims for unemployment benefits declined by 11,000 in the week ended 24 April to a seasonally adjusted 448,000. Claims are down about 28% from the prior year. The new claims level matched expectations.

Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. The metal was also pushed higher by record first-half imports to China, the world's largest user.

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

At the MCX, copper for April delivery closed lower by Rs 4.3 (1.3%) at Rs 330.75/Kg. Prices rose to a high of Rs 335.6/Kg and fell to a low of Rs 328.3/Kg during the day's trading.

Among other metals traded in the LME on Thursday, lead ended 0.7% lower at $2,235 a ton and zinc ended 0.3% lower at $2,330 a ton. Nickel ended 1.2% higher at $25,700. Aluminum ended 1% higher at $2,221 a ton.