Copper weakens

Prices drop as weak data hints at doubtful global recovery

Copper prices ended lower for second straight day at Comex on Friday, 06 August 2010. Prices dropped in tandem with US stocks after non-farm payroll data disappointed traders today.



At USA, copper futures for September delivery ended lower by 1 cent (0.3%) at $3.34 a pound on Friday. Copper gained 1% for the week. For the month of July, copper ended higher by 12% as concerns about a slowdown in the global recovery abated, pushing the red metal to its best month since April 2009.

Before this, 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 higher by 2.5%. On a yearly basis, copper has gained 21%.

On Friday, at LME, copper for delivery in three months ended lower by $21 (0.4%) at $7,370. 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 Labor Department in US reported on Friday, 06 August 2010 that total nonfarm payrolls fell by a seasonally adjusted 131,000 in July 2010. The nation's unemployment rate held steady at 9.5%.

But all the lost jobs were temporary jobs at the U.S. Census. Private-sector payrolls rose by an estimated 71,000 in July. The increase in private payrolls was weaker than the 100,000 increase that had been expected by Wall Street. It showed that U.S. employers continued to hire but at a sluggish pace adding to pessimism about the economic outlook.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.5%.

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.

At the MCX, copper prices for August delivery ended lower by Rs 0.9 (0.3%) at Rs 340.7/Kg. Prices rose to a high of Rs 343.75/Kg and fell to a low of Rs 338.45/Kg.

Among other metals traded in the LME on Friday, lead ended 0.3% lower at $2,192.25 a ton and zinc ended 1.2% higher at $2,122 a ton. Nickel ended 1.5% higher at $22,220. Aluminum ended 0.4% higher at $2,209 a ton.