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Copper Prices Plummet Amid Disappointment Over ECB's Bond Purchasing Program

Strategic Insights

— 1 min read

Copper prices struggled to make gains amidst a stronger dollar and disappointment over the European Central Bank's (ECB) reluctance to launch a large-scale bond purchasing program. The Comex March copper contract fell 5.60 cents, or 1.6%, to settle at $3.5000 a pound, marking the third consecutive day of declines. The market had initially rallied after the ECB cut its benchmark interest rate and announced measures to boost liquidity, but investor hopes were dashed when ECB President Mario Draghi stated that the central bank's bond purchasing efforts were not infinite.

Key Takeaways:

  • Copper prices declined by 5.60 cents, or 1.6%, to settle at $3.5000 a pound, marking the third consecutive day of losses.
  • The decline was attributed to a stronger dollar and disappointment over the ECB's reluctance to launch a large-scale bond purchasing program.
  • The market had initially rallied after the ECB cut its benchmark interest rate and announced measures to boost liquidity.
  • ECB President Mario Draghi stated that the central bank's bond purchasing efforts were not infinite, casting doubt on the market's hopes for more quantitative easing.
  • The decline in copper prices was also seen as a reflection of the ongoing sovereign debt crisis in Europe, which has been a dominant influence on global copper consumption.
  • Europe is the second-largest consumer of copper globally, after China, and a decline in the region's economy could erode copper demand.
  • The European Union officials are gathering for a summit on Friday to discuss bolstering fiscal union and the euro, which is expected to have a significant impact on the copper market.

Statistics:

  • Copper prices declined by 5.60 cents, or 1.6%, to settle at $3.5000 a pound.
  • The Comex March copper contract is priced in dollars, which put pressure on prices as the dollar rallied against the euro.
  • Europe as a region is the second-largest consumer of copper globally, accounting for 21% of global consumption.
  • China is the largest consumer of copper globally, accounting for 44% of global consumption.
  • The sovereign debt crisis in Europe has been a major influence on global copper prices, with a 25% decline in copper prices since the onset of the crisis.

Sources:

  • Dow Jones Commodities News via Comtex
  • RBC Capital Markets
  • Sucden Financial
  • Dow Jones Newswires
  • "European Central Bank"
  • Dow Jones & Company, Inc.

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