Copper Prices Plummet Amid EU Debt Crisis Fears

European officials' failure to agree on a comprehensive solution to the sovereign debt crisis sparked a sell-off in copper futures on Tuesday, with prices falling 2% to their lowest level in weeks. The cancellation of a key meeting between EU finance ministers on Wednesday added to the gloom, as investors sought safer havens for their assets. Copper consumption in Europe, a key driver of demand, is under threat as the debt crisis intensifies.

Key Takeaways:

• Copper futures dropped 2% on Tuesday, reaching a low of $3.3580 a pound, as investors lost optimism about a comprehensive EU debt solution.
• The cancellation of the EU finance ministers' meeting on Wednesday added to the sell-off, with investors seeking safer havens for their assets.
• Europe's struggle to stem the spread of its sovereign debt crisis has become a dominant driver of copper market sentiment, overshadowing other factors.
• David Meger, director of metals trading at Vision Financial, attributed the decline to a lack of agreement on how to solve the European sovereign debt issue.
• Edward Meir, senior commodity metals analyst with MF Global, noted that EU debt talks have had an upward pull on the copper market in recent days, but this surge is losing momentum.

Statistics:

• Copper futures fell by 5.80 cents, or 1.7%, to $3.3910 a pound on the Comex division of the New York Mercantile Exchange.
• Thinly traded October-delivery copper dropped 8.10 cents, or 2.4%, to $3.3660 a pound.
• Europe's copper consumption is the second-largest in the world, after China.

Sources:

• Dow Jones Commodities News via Comtex, October 25, 2011
• Tatyana Shumsky, Dow Jones Newswires, (212)-416-3095, tatyana.shumsky@dowjones.com
• Andrea Hotter in London contributed to this article.