Copper Prices Plummet Amid Inventory Build and Weaker Housing Data

Strategic Insights -

Copper futures suffered a significant decline on Thursday as a combination of factors, including a build in inventory and weaker-than-expected housing data, triggered sell orders and technical selling. The December copper contract lost 9.85 cents, or more than 3.5%, to settle at $2.7095 per pound on the Comex division of the New York Mercantile Exchange. Analysts pointed to demand concerns and the impact of a higher U.S. dollar, lower equities, and lower oil and gold prices on the metal's price.

Key Takeaways:

  • Copper futures fell sharply by 9.85 cents, or more than 3.5%, to settle at $2.7095 per pound due to a build in inventory and weaker-than-expected housing data.
  • The London Metal Exchange copper warehouse inventories rose by 8,925 metric tons to a five-month high of 340,875 tons, pressuring demand.
  • Resales of U.S. homes dropped 2.7% in August to a seasonally adjusted annual rate of 5.10 million, impacting copper prices.
  • The ICE Futures U.S. dollar index was up 0.726 point after copper closed, contributing to the metal's decline.
  • Technical selling was cited as a factor, with sell stops being hit around support at $2.75 a pound.
  • The most recent Comex inventory data showed an increase of 184 short tons to 53,378 short tons.

Statistics:

  • Copper futures lost 9.85 cents, or more than 3.5%, to settle at $2.7095 per pound.
  • London Metal Exchange copper warehouse inventories rose by 8,925 metric tons to 340,875 tons.
  • Resales of U.S. homes dropped 2.7% in August to an annual rate of 5.10 million.
  • The ICE Futures U.S. dollar index was up 0.726 point after copper closed.
  • The Dow Jones Industrial Average was down 38.39 points.
  • Comex December gold settled $15.50 lower at $998.90 an ounce.

Sources:

  • Dow Jones Commodities News via Comtex, September 24, 2009
  • National Association of Realtors, August 2009 existing home sales data
  • Archer Financial Services, Stephen Platt, analyst
  • Triland Metals, Guillaume Osouf
  • LOGIC Advisors, Bill O'Neill
  • Heritage West Financial, Ralph Preston, senior market analyst