Copper Prices Pause as European Bank Concerns Rise

Strategic Insights -

The copper market's rally paused on Tuesday, September 7, 2010, as investors turned to the US dollar in response to fresh concerns about European banks. Despite this, copper prices remain near four-month highs, fueled by economic indicators and signs of potentially stronger consumption of the metal. Analysts suggest that the rally may not be over, citing tightening supply and seasonal demand increases.

Key Takeaways:

  • Copper prices for December delivery fell 2.95 cents, or 0.8%, to settle at $3.4705 a pound on the Comex division of the New York Mercantile Exchange.
  • The decline was attributed to a stronger US dollar, which makes dollar-denominated copper more expensive for buyers using other currencies, dampening demand.
  • Copper inventories stored in London Metal Exchange warehouses fell 1,400 metric tons, leaving them at 395,475, while Comex inventories were down 300 short tons at 95,046 short tons.
  • Analysts, including Craig Ross of ApexFutures.com and Edward Meir of MF Global, cited concerns about European banks and the implications for the copper market.
  • Despite the decline, copper prices remain near four-month highs, with GFZ Indicator reporting a "green light" for the copper market, indicating that the rally may not be over.
  • Barclays Capital analyst Gayle Berry noted that LME copper inventories have been decreasing steadily, a trend that suggests increasingly tightening supply at a time when demand is typically increasing.

Statistics:

  • Copper prices for December delivery fell 0.8% to $3.4705 a pound.
  • Inventory levels at London Metal Exchange warehouses decreased by 1,400 metric tons.
  • Comex inventories were down 300 short tons.
  • The Shanghai Futures Exchange reported a weekly decline of 4,665 metric tons.
  • Copper prices still remain near four-month highs.

Sources:

  • Dow Jones News: "Copper Prices Drop as Dollar Rises"
  • Comtex: "Copper falls on European bank concerns"
  • The Wall Street Journal: "European Stress Tests Found to Be Flawed"