Sign in Subscribe
Newspaper publishing

Copper Prices Plummet Amid Global Economic Concerns

Strategic Insights

— 1 min read

Copper prices experienced a sharp decline on April 12, 2011, due to concerns about global demand, triggered by high commodity prices and economic risks in China and Japan. The copper market was particularly sensitive to the economic outlook, with the metal being widely used in electronics, buildings, automobiles, and appliances. Analysts at Goldman Sachs recommended selling commodities, citing "nascent signs of oil demand destruction," suggesting the end of a months-long commodities rally. The International Monetary Fund (IMF) cut its growth forecast for the U.S., citing high energy costs as a threat to the economic recovery.

Key Takeaways:

  • Copper futures fell 7.65 cents, or 1.7%, to settle at $4.3835 a pound on the Comex division of the New York Mercantile Exchange.
  • Goldman Sachs analysts recommended selling a basket of commodities, citing "nascent signs of oil demand destruction."
  • The International Monetary Fund (IMF) cut its growth forecast for the U.S. to 4.4%, citing high energy costs as a threat to the economic recovery.
  • Japan's nuclear agency raised its assessment of the Fukushima Daiichi nuclear power complex to the highest severity level by international standards, matching the 1986 Chernobyl disaster.
  • JPMorgan Chase & Co. forecast that Japan's economy will likely slip back into recession during the first half due to the earthquake and nuclear power plant disaster.
  • The IMF called for higher interest rates in China and other fast-growing Asian economies to ward off overheating pressures.
  • Traders have been paying close attention to China as the nation has embarked on monetary tightening measures that have stoked worries about decreased copper demand.
  • Copper inventories stored in London Metal Exchange warehouses rose 1,000 metric tons on April 12, 2011, leaving them at 446,700.

Sources:

  • Dow Jones Commodities News via Comtex, April 12, 2011
  • International Monetary Fund, April 11, 2011
  • Goldman Sachs, April 12, 2011
  • Standard Bank, April 12, 2011
  • JPMorgan Chase & Co., April 12, 2011
  • London Metal Exchange, April 12, 2011

Read more