Copper Prices Plummet Amidst European Debt Crisis Uncertainty

Copper prices fell to a two-week low on the Comex division of the New York Mercantile Exchange, as investors remained skeptical about Europe's progress towards combating its debt crisis. The March delivery contract fell 2.25 cents, or 0.7%, to settle at $3.4415 a pound, amidst a stronger dollar and German Chancellor Angela Merkel's rejection of an enhanced bailout fund. Copper is highly sensitive to the economic outlook, given its widespread use in construction and manufacturing, and prices have tracked sentiment towards the euro-zone debt crisis in recent weeks.

Key Takeaways:

• Copper futures fell 2.25 cents, or 0.7%, to settle at $3.4415 a pound, a two-week low, on the Comex division of the New York Mercantile Exchange.
• The dollar rose on investor caution towards Europe, making futures appear more expensive for buyers using other currencies.
• German Chancellor Angela Merkel rejected the idea of boosting the firepower of the euro zone's permanent bailout fund, sending the euro to its lowest level against the dollar in 11 months.
• Analysts say that even if an agreement is reached between Freeport-McMoRan Copper & Gold Inc. and striking workers at the company's Indonesia unit, copper shipments may take time to ramp back up due to damage to the mine's infrastructure incurred during the strike.
• The strike, which began in late October, halted shipments from the Grasberg mine, one of the world's top copper mines, but copper traders have largely looked past the supply disruption and focused on demand prospects in the euro zone and China.

Statistics:

• Copper prices fell 2.25 cents, or 0.7%, to settle at $3.4415 a pound.
• The dollar rose against the euro, its lowest level in 11 months.
• The Grasberg mine, one of the world's top copper mines, was halted by the three-month strike in Indonesia.
• Copper traders have largely looked past the supply disruption and focused on demand prospects in the euro zone and China.

Sources:

• "Dow Jones Commodities News via Comtex" -- Dec 13, 2011.
• Matt Day, Dow Jones Newswires.