Copper is often referred to as a bellwether commodity that reflects business activity in such industries as housing and autos. This past year, both industries have been beaten down, and so too has the price of copper. According to the Wall Street Journal (subscription required), nearby copper prices fell 6.40 cents to settle at $1.2530 per pound. The most active March contract fell 6.45 cents to $1.2810 per pound. The poor housing numbers recently released were just another catalyst in the price decline.
Copper, like many other commodities, has been in a liquidation phase where market participants are selling their inventories to raise cash. Traders have often looked to China for an indication that buying there will spark a rally. However, this did not happen. There was no follow through after a gain in the Chinese market last week.
Very much like the supply situation in oil, there is an 87,000 metric ton surplus of copper, when adjusted on a seasonal basis.
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Reader Comments (Page 1 of 1)
12-29-2008 @ 10:21AM
BHarrison said...
The market price of copper is directly tied to the construction industry and manufacturing . . . both of whihc have been glutted by the previous phony economic boom.
The demand for copper is going to be naturally adjusted to the new lower economic levels . . . less demand equals lower prices . . . that is pretty "common sense" isn't it?
The mining and production of Copper was elevated to meet the previous demands of the booming markets; now it will adjust to lower demand . . . there will be retaractions in production of copper; and layouffs in the copper industry, just like in all of the other industries.
Basically, the George Bush "phony economic boom" sucked about two or three years of economic activity out of our, and the global economy . . . . it also wrecked our financial infrastructures, our economy, and has bankrupted and/or financially crippled and/or impoverished MILLIONS of individuals . . . it is going to take a decade or longer to recover from this economic disaster, in as much as possible.
I guess a primary question should be: "Why would the reduction of the market price for copper be a surprise to anyone . . . at least it will reduce the number of people ripping off copper from commercial a/c systems, and such.
12-29-2008 @ 10:38AM
gilewicz said...
Whether or not it rises to the level of illegal manipulation, I think a case can be made that copper prices, and reported and unreported inventories, were artificially inflated (prices) and understated (inventories) during the 12-24 months preceeding the recent crash in prices. Now the market is correcting as it