Copper Prices Plummet as Industrial Gloom Weighs on Metals

Strategic Insights -

Copper futures continued their losing streak for the sixth session, plummeting 4.1 cents or 1.3% to $3.0625 a pound on the Comex division of the New York Mercantile Exchange. The industrial gloom in Europe has caused a significant drop in metal demand, with analysts revising their copper price forecasts lower. The International Copper Study Group has revised its estimates, indicating a smaller supply-demand gap, while Moody's Investors Service cut Italy's government bond rating, further dampening market sentiment.

Key Takeaways:

  • Copper futures have lost 25% in value since last month as investors cut their expectations for global economic activity.
  • Goldman Sachs, Standard Bank, and Barclays Capital have all revised their copper price forecasts lower to account for weaker demand.
  • The International Copper Study Group has revised its estimates, suggesting a smaller supply-demand gap.
  • Moody's Investors Service cut Italy's government bond rating, citing expectations of a weak economy during the next two to three years.
  • Copper prices were supported by some buyers who viewed the market's steep declines as an opportunity to buy, but the gains were short-lived.
  • Retail sales across the euro-zone fell in August, while the region's economy contracted in September for the first time in more than two years.

Statistics:

  • Copper futures have lost 25% in value since last month.
  • Copper prices dropped 4.1 cents or 1.3% to $3.0625 a pound on the Comex division of the New York Mercantile Exchange.
  • The International Copper Study Group revised its estimates, indicating a smaller supply-demand gap.
  • Moody's Investors Service cut Italy's government bond rating.
  • Retail sales across the euro-zone fell by 1.5% in August.
  • The euro-zone economy contracted by 0.2% in August.

Sources:

  • Dow Jones Commodities News via Comtex, October 5, 2011.
  • Goldman Sachs.
  • Standard Bank.
  • Barclays Capital.
  • International Copper Study Group.
  • Moody's Investors Service.
  • Matt Day, Dow Jones Newswires, 212-416-4986, matt.day@dowjones.com.