Copper Futures Fall Amid European Debt Crisis and Chinese Inflation Fears

Copper futures plummeted for the second session on Monday, weighed down by concerns over Europe's escalating debt crisis and China's escalating inflation. The steel price, a crucial indicator of economic growth, sank 0.9% to $4.3735 a pound on the Comex division of the New York Mercantile Exchange. Market sentiment was further eroded by China's 6.4% increase in consumer price index, which raised fears of further monetary tightening measures.

Key Takeaways:

• Copper futures fell 3.85 cents, or 0.9%, to $4.3735 a pound on the Comex division of the New York Mercantile Exchange.
• The European debt crisis is weighing on the copper market, with Italy's ratings downgrade and wavering bank stocks intensifying concerns.
• China's 6.4% increase in consumer price index has heightened the likelihood of further monetary tightening measures, threatening copper demand.
• Copper imports by China showed their first month-to-month gains since March, but total imports for the first half of the year were down 24% from 2010 levels.
• Investors cashed out of traditional risky assets like commodities and equities into safe-harbor assets like gold and the U.S. dollar.
• The ICE U.S. Dollar Index rose to 75.822, making dollar-denominated commodities like copper more expensive for buyers using other currencies.
• A weak U.S. labor market reading on Friday contributed to copper's decline.

Statistics:

• Copper futures fell by 3.85 cents, or 0.9%, to $4.3735 a pound.
• The ICE U.S. Dollar Index rose to 75.822.
• China's consumer price index increased by 6.4%.
• Chinese copper imports rose by 0.9% in the first half of the year.
• Total Chinese imports for the first half of the year were down 24% from 2010 levels.

Sources:

• Dow Jones Commodities News via Comtex.
• RBC Capital Markets.
• Dow Jones Newswires (Matt Day).
• Dow Jones & Company, Inc.