Copper Futures Dip as Participants Sell in Sympathy with Equities

Strategic Insights -

Copper futures fell in May 2009 as participants sold the metal in sympathy with equities and scrap dealers hedged inventory due to concerns about a potential decline in prices. The July copper contract dropped 5.5 cents to settle at $2.0310 a pound on the Comex division of the New York Mercantile Exchange. Market analysts attributed the decline to the "sloppy stock market," with one analyst stating that copper was in a near-term correction with equities. Fresh signs of strain among U.S. consumers, including a 0.4% decline in retail sales in April, further dampened market sentiment.

Key Takeaways:

  • Copper futures fell 5.5 cents to $2.0310 a pound on the Comex division of the New York Mercantile Exchange in May 2009.
  • Market participants sold copper in sympathy with equities, with the Dow Jones Industrial Average falling over 200 points at one point on Wednesday.
  • Scrap dealers hedged inventory due to concerns about a potential decline in prices, with one dealer stating that business "stinks" and that it will be a "long summer" until infrastructure needs bring new buyers.
  • inventories of copper stored in London Metal Exchange warehouses fell 5,275 metric tons on Wednesday, but prices were unresponsive to this decline.
  • U.S. retail sales fell 0.4% in April, beating expectations of a 0.1% increase, and highlighting concerns about the broader economy's health.
  • The "sloppy stock market" was cited as a major factor in the decline of copper futures, with one analyst stating that copper is in a near-term correction with equities.

Statistics:

  • Copper futures fell 5.5 cents to $2.0310 a pound.
  • Dow Jones Industrial Average fell over 200 points on Wednesday.
  • Retail sales fell 0.4% in April, beating expectations of a 0.1% increase.
  • Inventories of copper stored in London Metal Exchange warehouses fell 5,275 metric tons on Wednesday.
  • London Metal Exchange warehouse stocks left at 373,750 metric tons on Wednesday.
  • Comex inventory data released late Tuesday showed a 107 short ton increase at 48,847 short tons.

Sources:

  • Dow Jones Commodities News via Comtex.
  • Sterling Smith, vice president with FuturesOne.
  • Pat Donnelly, senior broker at Peak Trading Group.
  • George Gero, vice president with RBC Capital Markets Global Futures.
  • Edward Meir, MF Global analyst.