Copper ends winning streak

Prices drop due to weak economic data

Copper prices ended their six-day winning streak and ended lower for first time in seven days at Comex on Tuesday, 27 July 2010. Weaker than expected consumer confidence data once again raised concerns about overall global recovery in everybody's mind.



At USA, copper futures for September delivery ended lower by 2 cents (0.6%) at $3.19 a pound on Tuesday. Last week, copper ended higher by 8.5%. For second quarter, copper dropped 16%. 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 2.9%.

On Tuesday, at LME, copper for delivery in three months ended lower by $52 (0.7%) at $7,097. 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. Copper ended FY 2009 higher by 140%.

The Conference Board in US reported on Tuesday, 27 July 2010 that consumer confidence fell in July on concerns about jobs and business conditions. July's consumer confidence index fell to 50.4, the lowest level since February, from an upwardly revised 54.3 in June.

As per the report, consumers' view of current conditions and short-term outlook fell in July. The present-situation index fell to 26.1 in July, the lowest level since March, from 26.8 in June. Those saying present business conditions are "bad" rose to 43.6% in July from 41% in June, while those saying jobs are "hard to get" rose to 45.8% from 43.5%.

The expectations index fell to 66.6 in July, hitting the lowest level since February, from 72.7 in June. Those expecting business conditions in six months to be "worse" rose to 15.7% in July from 13.9% in June, while those expecting more jobs fell to 14.3% from 16.2%, and those expected a decrease of income rose to 17.5% from 16.8%.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, erased earlier losses and rose by 0.1%.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%. Copper fell for three months in a row through June on concern about efforts to curb growth in China, the world's biggest user of the metal.

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 Tuesday, lead ended 0.2% lower at $2,012 a ton and zinc ended 0.3% lower at $1,947 a ton. Nickel ended 0.2% higher at $20,845. Aluminum ended 0.1% lower at $2,054 a ton.

At the MCX, copper prices for August delivery ended lower by Rs 2.5 (0.7%) at Rs 331.4/Kg. Prices rose to a high of Rs 333.65/Kg and fell to a low of Rs 328.5/Kg.