Copper weakens as Euro zone's troubles continue to linger

Discouraging data from China further pressure prices which drop to two week low

Red metal prices ended substantially lower on Monday, 12 December 2011 at Comex. Copper hit a near two-week low on Monday, pressured by worries about weaker demand for industrial metals as Europe's move towards greater economic integration failed to calm fears of a deepening debt crisis and a potential regional recession.

Copper for March delivery ended lower by 9 cents (2.6%) at $3.46 a pound at Comex on Monday. Last week, copper lost 0.6%. Copper ended the month of November lower by 1.9%.



Red metal prices for three-month-delivery at LME fell $209 (2.6%) to $7,606 a metric ton on Monday.

Reports from last week's eurozone summit initially generated a positive response, but many traders expressed skepticism in the ability of eurozone members to efficiently implement plans and reach an agreement on those topics that couldn't be brought to a consensus. The concern that the process will simply continue to slog along without producing real results sent yield spreads higher on debt from Italy and Spain, and also spurred concerted selling among the region's major bourses.

In the currency market on Monday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by about 1.1%.

In addition to concerns about Europe, market participants dealt some relatively discouraging data from China. Although China experienced export growth during November that exceeded what some had anticipated, the rate of increase was slower than that of the prior month. This downbeat data on China economy more than offset an upbeat data from the same place where imports of copper, used in power and construction, reached their highest level since March 2010.

Supply concerns limited copper's falls. As per latest reports, an Indonesian workers' union plans to extend a three-month strike at Freeport McMoRan Copper & Gold's Grasberg mine, the world's second-largest copper mine, until 15 January, 2011.

Among other traded metals at LME on Monday, lead in London fell 2.98% to $2,100 a ton and nickel closed lower by 1.3% at $18,301 a ton. Aluminum closed lower by 2.3% at $2,016.5 a ton, and zinc closed lower by 3.3% at $1,937 a ton.

At the MCX, copper prices for March delivery ended lower by Rs 4.75 (1.3%) at Rs 407.95/Kg. Prices rose to a high of Rs 411.5/Kg and fell to a low of Rs 405.6/Kg.