Sign in Subscribe
Newspaper publishing

Copper Prices Plummet on Record-Low US Home Sales

Strategic Insights

— 2 min read

Copper futures extended earlier losses following a report that U.S. home sales had plummeted to a record low in May, sparking doubts about future demand for the metal. The decline in home sales, coupled with a rise in the months' supply of new homes, has created a challenging environment for copper demand. The ample housing inventory on the market allows potential buyers to delay purchases, further exacerbating the uncertainty surrounding copper prices. Copper futures are sensitive to economic data, particularly construction and housing trends, as they are extensively used in wiring and piping applications.

Key Takeaways:

  • Copper futures fell 6.3 cents, or 2.1%, to $2.9290 per pound on the Comex division of the New York Mercantile Exchange, with most active September down 5.7 cents, or 1.9%, at $2.9535 a pound.
  • New home sales in May plunged 32.7% to a seasonally adjusted rate of 300,000, the lowest annual rate since 1963.
  • The sharp decline in sales caused the months' supply of new homes at the current sales rate to rise to 8.5 from a revised 5.8 in April.
  • The ample housing inventory on the market allows potential buyers to delay purchases, as copper broker stated, "There is a lot of supply out there so buyers feel they can afford to wait."
  • Copper futures are sensitive to economic data, particularly construction and housing trends, as they are extensively used in wiring and piping applications.
  • The recent decline in existing home sales, reported Tuesday, has further reinforced the challenging environment for copper demand.
  • The Federal Open Market Committee will release its interest rate decision at 2:15 p.m. EDT, with economists expecting the Fed to keep the Federal funds target rate in a current range from 0%-0.25%.

Statistics:

  • Copper prices fell 6.3 cents, or 2.1%, to $2.9290 per pound on the Comex division of the New York Mercantile Exchange.
  • New home sales in May plunged 32.7% to a seasonally adjusted rate of 300,000.
  • The months' supply of new homes at the current sales rate rose to 8.5 from a revised 5.8 in April.
  • The housing inventory allows potential buyers to delay purchases, with over 213,000 homes for sale in May.

Sources:

  • ("UPDATE: BASE METALS: Comex Copper Falls On Record-Low US Home Sales," at 11:01 a.m. EDT, Dow Jones Commodities News via Comtex, June 23, 2010)
  • Tom Sellen, Dow Jones Newswires; 913-322-5177; tom.sellen@dowjones.com

Read more