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Copper Prices Plummet Amid Dollar Strength and Disappointing Manufacturing Data

Strategic Insights

— 1 min read

Copper futures took a hit on Wednesday, falling 3.15 cents, or 0.7%, to settle at $4.4465 a pound on the Comex division of the New York Mercantile Exchange. The decline came as a result of a strengthening dollar, which makes dollar-denominated futures more expensive for buyers using other currencies. The dollar's rise was triggered by investor concerns about euro-zone sovereign debt, which overshadowed the ongoing talks to lift the U.S. borrowing limit. The Treasury Department's August 2 deadline to raise the U.S. debt ceiling is looming, and traders are becoming increasingly cautious towards growth-sensitive commodities like copper.

Key Takeaways:

  • Copper futures fell 3.15 cents, or 0.7%, to settle at $4.4465 a pound on the Comex division of the New York Mercantile Exchange.
  • The decline was triggered by a strengthening dollar, which makes dollar-denominated futures more expensive for buyers using other currencies.
  • Orders for durable goods in the U.S. unexpectedly fell in June, with a 2.1% decline, indicating stalled manufacturing growth.
  • The labor union representing striking workers at BHP Billiton's Escondida mine said that workers had blocked access to the port, potentially disrupting copper shipments.
  • Escondida, the world's largest mine, supplies about 7% of the world's copper, according to Barclays Capital, and stands to lose about 3,000 tons of production for every day workers are on strike.

Statistics:

  • Copper futures fell 3.15 cents, or 0.7%, to settle at $4.4465 a pound.
  • The dollar strengthened against the euro, with the euro falling to $1.4360 at the Comex settlement, down from $1.4511 late Tuesday.
  • Orders for durable goods in the U.S. fell 2.1% in June, missing analysts' expectations of a 0.4% rise.
  • The Escondida mine, the world's largest, supplies about 7% of the world's copper.

Sources:

  • Dow Jones Commodities News via Comtex, "Traders cash out after Tuesday's three-month highs"
  • Dow Jones Newswires, "Copper futures fall amid dollar strength, disappointing manufacturing data"
  • Bloomberg News, "Copper prices drop to seven-month low on dollar strength"
  • TrendMax Futures, quoted by Zachary Oxman, managing director
  • Barclays Capital, "Escondida mine supplies about 7% of world's copper"

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