Red metal registers big weekly loss

Demand concerns weigh on metal prices

Red metal prices fell at Comex on Friday, 04 June 2010. Prices dropped as economic concerns once again resurfaced following worse than expected job report and problems pertaining to Hungary. These problems once again questioned metal's demand in coming months.






At USA, copper futures for July delivery ended lower by 13 cents (4.3%) at $2.81 a pound on Friday. For the week, copper shed 9.3%. For the month of May copped shed 7%. In April, copper lost 6.1%. 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 lower by 16.5%.

On Friday, at LME, copper for delivery in three months ended marginally higher by lower by $42 (0.6%) at $6,567. 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.

Prices have increased by almost 35% in the past twelve months due to higher imports from China. Copper ended FY 2009 higher by 140%.

In the currency market on Friday, the dollar stayed strong for almost the entire day and the dollar index ended the day with a 1% gain.

Among economic reports for the day, The Labor Department in US reported on Friday, 04 June 2010 that nonfarm payrolls grew by a seasonally adjusted 431,000 in May, but virtually all the new jobs were temporary jobs at the U.S. Census, leaving private-sector hiring very weak. Excluding 411,000 temporary Census workers, payrolls rose by 20,000 in May. The payrolls growth came in weaker than the 540,000 increase expected. The nation's unemployment rate fell to a seasonally adjusted 9.7% in May from 9.9% in April. Market had been expecting the jobless rate to sink to 9.8%.

The Dow ended the day with a loss of 324 points on Friday. Market participants sold stocks learning that officials from Hungary stated that economic conditions in their country are grave and that the country might be the next one in defaulting on its debt. In addition, the country does not plan to put austerity measures in place, leading many wonder whether the European Union will have to provide a bailout.

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

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.

Among other metals traded in the LME on Friday, lead ended 0.3% lower at $1,639 a ton and zinc ended 1% lower at $1,727.45 a ton. Nickel ended 0.5% lower at $18,583. Aluminum rose 0.6% to end at $1,967 a ton.