It’s been a bad week on the copper markets with the AUD LME price falling 40 cents/kg in a week and almost 20cents/kg overnight. Market commentary referred to the terrible events in Paris over the weekend as the main catalyst, as investment funds liquidated positions and reduced their risk appetite. Copper is now trading at its lowest level since May 22 2009.
Please find the following for your perusal;
*** DJ Copper Falls to Six-Year Low Following Paris Attacks ***
By Ese Erheriene
Copper prices set a fresh six-year low on Monday as the terror attacks in Paris added to concerns about the global economy that have caused a month-long selloff.
The most actively traded contract, for December delivery, settled down 5.25 cents, or 2.4%, at $2.1155 a pound on the Comex division of the New York Mercantile Exchange. This was the lowest close since May 22, 2009, when prices closed at $2.0975.
The price of the metal tumbled as investors sold down their holdings of so-called risk assets after acts of terrorism in Paris on Friday triggered doubt about the possible effects on the global economy. The falls underscored the fragile nature of investor sentiment in a metal which has seen sharp declines linked to China’s weakening economy.
“With global growth already struggling…, when you get tragic events, as we had over the weekend, then more risk is taken away from the table, ” said Robin Bhar, head of metals research at Societe Generale SA.
Copper is broadly considered a barometer for global economic health, which is heavily influenced by China. China accounts for roughly 45% of global copper demand, and declining Chinese imports help push down prices, traders at TD Securities said in a note to clients.
China-based funds have also played a role in falling prices. Their heavy selling in January sent copper prices to a 5 1/2 year low.
“We continue to see some pretty significant selling out of China,” said David Wilson, director of metals research and strategy at Citigroup Inc. “[It] kind of looks like what they were doing back in January.”