Copper Prices Fall Amid Weaker Global Equities and Disappointing US Income Data

Copper prices suffered a setback on Friday, falling 1.6% to $3.194 a pound, as weaker-than-expected global equities and US personal income data weighed on the market. The decline in copper prices is consistent with the metal's sensitivity to the growth outlook, as it is widely used across various industries and can serve as a proxy for the economic outlook. Despite Barclays' revised forecast, which expects copper prices to average $3.62 a pound in the fourth quarter, the short-term outlook for copper prices remains uncertain.

Key Takeaways:

• Copper futures fell 5.2 cents to $3.194 a pound on the Comex division of the New York Mercantile Exchange, representing a 1.6% decline.
• The decline in copper prices was largely driven by weaker-than-expected global equities and disappointing US personal income data, which weighed on the market's growth prospects.
• Barclays Capital cut its copper price forecasts to reflect weaker-than-expected economic activity, with expectations of benchmark copper prices averaging $3.62 a pound in the fourth quarter, down from a previous estimate of $5.44 a pound.
• The industrial metal remains sensitive to the growth outlook, with widespread uses across various industries, and can serve as a proxy for the economic outlook.
• China's manufacturing activity, which accounts for 40% of the world's refined copper consumption, also weighed on the market, with a revised estimate showing contraction for a third consecutive month.
• The decline in copper prices is part of a broader trend of weaker-than-expected economic data, including China's manufacturing activity and US personal income data.

Statistics:

• Copper futures fell 5.2 cents to $3.194 a pound on the Comex division of the New York Mercantile Exchange.
• The decline in copper prices represents a 1.6% decrease from the previous day.
• Barclays Capital expects benchmark copper prices to average $3.62 a pound in the fourth quarter.
• China's manufacturing activity has contracted for a third consecutive month, with a revised estimate showing a purchasing managers index (PMI) of 49.9.
• US personal income fell 0.1% in August, short of economists' expectations for a 0.1% rise.

Sources:

• Dow Jones Commodities News (via Comtex), September 30, 2011
• Barclays Capital (Matt Day, Dow Jones Newswires), September 30, 2011
• HSBC (Matt Day, Dow Jones Newswires), September 30, 2011
• Standard Bank (Matt Day, Dow Jones Newswires), September 30, 2011