With all the turmoil on world stock markets last week it was comforting to see the commodity markets holding steady … up until last night. Last night the attention turned to the commodity markets, and in particular copper, the result being a large overnight fall in the official cash price from USD8781 to USD8,415 or 4.4%. This represented an 11 month USD low for copper. Commentators expect continued uncertainty about Europe will keep a lid on commodities for the foreseeable future.
Locally, the AUD/USD continues to absorb some of the falls with the AUD/USD currently at 1.0165 a 5 week low .
DJ BASE METALS: EU Debt Fears Push Copper To 11-Month Low
– Comex Dec copper falls
– Lack of progress in euro-zone crisis, stronger dollar spark selling
– Strike at Peruvian mining company ends, limiting chance of supply disruptions
By Matt Day Of DOW JONES NEWSWIRES
Mounting worries about the financial health of Europe sent traders cashing out of growth-sensitive assets Monday, pushing copper to its lowest price in more than 11 months. The most actively traded copper contract, for December delivery, fell 14.90 cents, or 3.8%, to settle at $3.7825 a pound on the Comex division of the New York Mercantile Exchange, the lowest ending price for a most-active contract since Oct. 7. Copper prices had held up well in recent weeks despite the grinding euro-zone debt crisis, as mine supply disruptions and a steady demand outlook from top consumer China kept a floor under prices near the psychologically important mark of $4 a pound. That changed Monday, with copper sliding as worries about a European credit crunch caused investors to dump perceived risky assets. Global equities markets were generally lower, and industrial bellwether crude oil was poised to settle near $85 a barrel, the lowest since August. The benchmark copper futures contract at one point was down by more 4%.
“The (copper) market has just broken down,” says Scott Meyers, an analyst with Pioneer Futures. Investors Monday were disappointed with the result of the weekend’s meeting of European finance ministers. The Greek finance minister on Monday said the country would make further spending cuts to secure its next round of international financial support, but market participants still view a default by the debt-laden country as increasingly likely. ”Copper prices remain at the mercy of macroeconomic sentiment,” said Barclays Capital analyst Nicholas Snowdon. Copper was also pressured as investors turned to the dollar as a refuge. A rising dollar can hit dollar-denominated copper by making the futures more expensive for buyers using other currencies. The removal of a risk to available copper supply also weighed on market sentiment, as a labor strike at a large Peruvian mining company came to an end.