Copper Investing News

By Leia Michele Toovey- Exclusive to Copper Investing News

Copper started the week on the upside with the dollar’s decline instigating gains that strong- armed the market catastrophe’s negative sentiment.

As the week progressed though, copper futures ended lower as global economic growth concerns and further turmoil in financials weighed on sentiment. Copper prices were left near eight month lows.

Copper for December delivery settled down 4.65 cents at US$3.0425 a lb on the New York Mercantile Exchange’s COMEX division, the session range spanned US$3.0315 to US$3.1250. On Tuesday, the benchmark contract fell as low as US$3.02. Spot September HGU8 shed 4.20 cents to finish at US$3.0710 a lb. Copper for delivery in three months on the London Metal Exchange touched US$6,625 per tonne in early trade, its lowest level since December 21. It touched a high of US$6,987 a tonne before closing at US$6,749 from its close of US$6,760 on Wednesday.

The aftermath of the U.S. Federal Reserve’s steady interest rate policy, which analysts determined as restrictive for economic activity, put industrial metal copper under pressure from economic growth concerns. The U.S. Federal Reserve elected to leave interest rates on hold on Tuesday at 2 per cent, citing concerns about downside risks to growth and upside risks to inflation. Recessionary fears in the United States, highlighted by the bankruptcy of investment bank Lehman Brothers and the sale of brokerage Merrill Lynch, as well as slower growth in Europe and China should continue to drag copper prices down from record highs.

In India, the metal was responding differently. Indian copper futures on Thursday rose as a dipping dollar infused strength into base metals. The benchmark November copper MCCQ8 on the Multi Commodity Exchange of India (MCX) was up 2.07 per cent at Rs 322.4 per kg. The dollar fell to its lowest in three weeks against a basket of major currencies on Thursday as jitters about the U.S. financial sector, following Lehman Brothers filing for bankruptcy protection this week, continued to dominate sentiment.

Shanghai copper prices dropped on Thursday to their lowest since November. While some investors bought up select commodities like oil and gold as a hedge against a worsening crisis on Wall Street, industrial metals were held back by fundamental concerns, with the weak U.S. housing data topping the list. Overall copper consumption in January to July 2008 was 10.63 million tonnes, down 0.2 per cent from the same period in 2007 and Chinese consumption was higher at 2.883 million tonnes from 2.757 million.

Even though copper prices are dropping, they are not falling to the same extent as other metals. Due to plummeting zinc prices, OZ Minerals is slashing zinc production at its Golden Grove mine in Western Australia, and turning production towards more-profitable copper. Yesterday, the company announced that it would produce about 50,000 tonnes less of zinc in concentrate at Golden Grove than previously planned, and instead boost copper production by 14,000 tonnes at the polymetallic mine.

OZ minerals is a new company formed this year by the merger of zinc miner Zinifex with copper and gold miner Oxiana, At current London Metal Exchange spot metal prices, the 50,000 tonnes of zinc represents a loss of about US$85 million, while the increase in copper represents about US$95 million. For more information on what is going on in the zinc market, visit zinc investing news for updated market and company commentaries.