Copper Prices Fall Amid Weak US Employment Data

Copper prices plummeted for a second consecutive day on September 2, 2011, as unexpectedly weak US employment data sent shockwaves through the markets, eroding investor confidence and weighing on the metal's prices. The US nonfarm payroll data showed a flat growth in August, with the government sector shedding jobs while private businesses added only 17,000 new positions. This development, coupled with the unchanged unemployment rate of 9.1%, led to a decline in commodities and equities, with copper futures suffering the most. The red metal, used in a wide range of goods from electronics to household appliances, is highly sensitive to economic data, and its prices are expected to remain stagnant until the economic outlook becomes clearer.

Key Takeaways:

• Copper futures for December delivery fell 3.60 cents, or 0.9%, to settle at $4.1245 a pound on the Comex division of the New York Mercantile Exchange.
• The front-month contract for September delivery dropped 3.55 cents, or 0.9%, to settle at $4.1070 a pound.
• Weak US employment data undermined investor tolerance for risk, leading to a decline in commodities and equities.
• The Escondida mine, the world's largest copper mine, lifted the force majeure on its copper concentrate shipments, allowing it to suspend delivery due to circumstances outside of its control.
• Analysts at Barclays Capital do not expect copper prices to recover strongly and outperform until short-term macro worries and concerns about Chinese demand dissipate.
• US nonfarm payrolls were flat in August, with the government sector shedding jobs while private businesses added only 17,000 new positions.

Statistics:

• Copper futures fell 3.60 cents, or 0.9%, to $4.1245 a pound on Comex.
• The E-mini copper futures contract, for September delivery, lost 3.55 cents, or 0.9%, to settle at $4.1070 a pound.
• The unemployment rate remained unchanged at 9.1% in August.
• The government sector shed jobs, while private businesses added only 17,000 new positions.
• The Escondida mine produced 1.086 million metric tons of copper in 2010.

Sources:

• "Comex Dec copper down 3.60 cents, or 0.9%, at $4.1245/lb." - Dow Jones Commodities News via Comtex.
• "Weak U.S. employment data weigh on copper prices." - Dow Jones Newswires.
• "Chile's Escondida mine lifts force majeure on copper concentrate shipments." - Dow Jones Newswires.
• "Barclays Capital analysts comment on copper fundamentals." - Barclays Capital.