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Copper Prices Weaken Amid EU Summit Doubts

Strategic Insights

— 1 min read

Copper prices faltered on Wednesday as doubts about the success of the upcoming European Union summit cast a shadow over the global economy. The stronger dollar pressured copper prices, despite the metal's critical role in the European market, where it is used extensively. The German government's pessimism about the summit's outcome contributed to the decline in copper prices, which remain close to their one-month high.

Key Takeaways:

  • Comex March copper futures decreased by 2.3 cents, or 0.6%, to $3.5525 a pound due to the stronger dollar.
  • European Union officials are set to meet in Brussels to discuss the region's debt crisis and potential changes to the treaty enforcing budget discipline.
  • German pessimism about the summit's success pushed the euro lower against the dollar, further pressuring copper prices.
  • Copper prices struggled to make gains due to the stronger dollar, which makes the metal more expensive for buyers using foreign currencies.
  • Europe is the second-largest consumer of copper globally, behind China.
  • Despite edging lower, copper futures remain close to their one-month high of $3.6155 a pound.
  • Market researcher William Adams of Fastmarkets.com expressed concerns about the potential for further economic disappointment due to the complexity of the EU's problems and vested interests.

Statistics:

  • Copper prices decreased by 2.3 cents (0.6%) to $3.5525 a pound in March futures.
  • The euro fell against the dollar due to German pessimism about the EU summit's outcome.
  • Copper is the second most-consumed metal globally, after copper, with Europe being the primary consumer in the region.
  • Copper prices are closely tied to the dollar's value, making the metal more expensive for foreign buyers during periods of dollar strength.
  • The European Union's debt crisis and potential treaty changes weighed heavily on the market heading into the summit.

Sources:

  • "PRECIOUS METALS: Gold Sags On EU Summit Doubts, Dollar" (Dow Jones Commodities News via Comtex, Dec 07, 2011)
  • Tatyana Shumsky, Dow Jones Newswires, 212-416-3095, tatyana.shumsky@dowjones.com (END)
  • Dow Jones Newswires, 12-07-11 0940ET
  • Copyright 2011 Dow Jones & Company, Inc.

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