Search Now

Recommendations

Friday, January 07, 2011

Copper drops for second time in three days


Inventories, strong dollar and mixed economic data hammer prices



Copper prices ended lower for the second time in three days on Thursday, 06 January 2011. Prices fell due to rising inventories, strong dollar and mixed economic data.

At USA, copper futures for December delivery ended lower by 8 cents (1.8%) at $4.33 a pound on Thursday. The price climbed 4.4% last week, the fifth straight gain.

At LME prices fell by $75 (0.8%) to $9,475 a ton. Prices rose to a high of $9,745 earlier during the week.

The metal was up 16% in December and 22% in the fourth quarter. For the year 2010, copper gained 33%. It was the ninth rise for the red metal in ten years.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies rose by 0.7%.

The Labor Department in US reported on Thursday, 06 January 2011 that the number of U.S. workers who filed new applications for unemployment benefits rose last week by 18,000 to 409,000, but the level of claims is still sharply lower from just six months ago. Market had expected initial claims to rise to a seasonally adjusted 400,000. Last week's jobless claims were revised up by 3,000.

The four-week average of new claims, however, fell 3,500 to 410,750, a two-and-a-half-year low. The moving average is considered a more accurate gauge of employment trends because it evens out fluctuations in the weekly data that can give a distorted picture of the labor market.

Though global inventories of red metal dropped by 17% last year, recent data shows that LME inventories rose for 16 straight sessions and are at highest levels since September of last year.

Among other metals traded in the LME on Thursday, lead ended 0.4% lower at $2,513 a ton and zinc ended 0.6% lower at $2,375 a ton. Nickel lost 0.6% at $24,695 Aluminum rose 2.2% to end at $2,519 a ton.

At the MCX, copper prices for February delivery ended lower by Rs 7.7 (1.7%) at Rs 435.9/Kg. Prices rose to a high of Rs 443.9/Kg and fell to a low of Rs 435.15/Kg.