Copper Prices Plummet Amid Dubai Debt Fears

Copper futures suffered a significant decline on a shortened session as risk appetite dwindled amidst concerns over Dubai's largest holding company's potential debt default. The news of Dubai World's request for a six-month stay on repayment of its $60 billion in debts sparked profit-taking in copper, with investors unwinding some of the recent large push into the metal and other commodities. Although the dollar initially rose, copper pared its losses as the currency eased, and markets calmed when banks and governments indicated their exposure to Dubai World's debt was not as large as initially thought.

Key Takeaways:

• Copper futures for March delivery fell 7.15 cents, or more than 2.2%, to settle at $3.1255 a pound after an overnight low of $3.0210 on the Comex division of the New York Mercantile Exchange.
• The contract is down from $3.23 late Wednesday, its highest point since September 2008.
• The decline in copper prices was attributed to the dollar's rise, as a strengthening greenback makes the metal more expensive for buyers using other currencies.
• Dubai World's debt default concerns sparked a sell-off in copper, with investors unwinding their recent large push into the metal and other commodities.
• Banks and governments' indication that their exposure to Dubai World's debt was not as large as initially thought helped to calm markets and ease the dollar's rise.

Statistics:

• Copper futures fell 7.15 cents, or 2.2%, to settle at $3.1255 a pound.
• The contract is down from $3.23 late Wednesday, a drop of 1.39 cents.
• The ICE Futures U.S. dollar index was up 0.158 point at 74.984, off its strongest level of 75.575.
• The euro was down but up from its lowest level.
• The Dow Jones Industrial Average showed a similar trend to the euro.

Sources:

• Dow Jones Commodities News via Comtex
• Dow Jones Newswires
• FuturePath Trading
• ICE Futures U.S.
• New York Mercantile Exchange
• Comex division