Copper Prices Decline Amid Profit-Taking and Soaring US Dollar

Strategic Insights -

Copper prices took a hit on Monday, October 4, 2010, as participants sought to cash in on recent gains and concerns about Ireland's sovereign debt boosted the US dollar. The strong dollar made dollar-denominated copper more expensive for buyers, hurting demand. The declines came as Chinese traders, the world's largest copper consumer, were out of the markets due to National Day celebrations.

Key Takeaways:

  • Copper futures for December delivery were recently down 0.95 cents, or 0.3%, at $3.6810 a pound on the Comex division of the New York Mercantile Exchange.
  • The December copper contract gained 7.3% last week, settling at its strongest price since July 2008.
  • A stronger dollar was cited as a reason for the decline in copper prices, as it makes dollar-denominated copper more expensive for buyers.
  • Inventories of copper stored in London Metal Exchange warehouses rose 650 metric tons on Monday, leaving them at 374,450 metric tons.
  • The most recent Comex inventory data, released late Friday afternoon, showed a decline of 300 short tons at 84,583 short tons.
  • The ICE Futures US Dollar Index was recently up 0.3%, with the dollar strong and the euro weak.
  • A report in an Irish newspaper stated that Ireland's government must find up to EUR4.5 billion ($6.2 billion) in savings in December's budget.

Statistics:

  • Copper prices declined 0.3% to $3.6810 a pound.
  • The December copper contract gained 7.3% last week.
  • Inventories of copper stored in London Metal Exchange warehouses rose 650 metric tons to 374,450 metric tons.
  • The ICE Futures US Dollar Index was up 0.3%.
  • Ireland's budget deficit requires up to EUR4.5 billion ($6.2 billion) in savings.

Sources:

  • Dow Jones Commodities News via Comtex
  • RBC Capital Markets
  • ICE Futures US Dollar Index
  • London Metal Exchange
  • Irish newspaper (not specified in the source)