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BASE METALS: Copper At 3-Week Low On Italy, Spain Concerns
Aug 4,2011 09:53CST
industry news
Source:SMM
Copper futures retreated to a three-week low Wednesday as market focus shifted back to Europe's government debt problems in the wake of a U.S. debt deal.

Aug 03, 2011 (Dow Jones Commodities News via Comtex) -- --Comex Sep copper down 5.20 cents, or 1.2%, at $4.3430/lb

--Trader attention returns to sovereign debt problems in Italy, Spain

--Market on the lookout for U.S. economic data, employment

By Tatyana Shumsky
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures retreated to a three-week low Wednesday as market focus shifted back to Europe's government debt problems in the wake of a U.S. debt deal.

The most actively traded contract, for September delivery, was recently down 5.20 cents, or 1.2%, at $4.3430 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper was down 5.55 cents, or 1.3%, at $4.3335 a pound.

Italian and Spanish government bond prices have slumped this week amid growing fears that Europe's sovereign debt problems are spreading to economies too large to be rescued by the existing euro-zone bailout fund.

The European Union is a major area of copper consumption, often second behind top copper consumer China, and escalating concern that a government debt default will destabilize this economic bloc is pressuring copper futures lower.

"If you don't see a recovery in Europe, obviously commodity demand is going to be soft," said Rob Kurzatkowski, senior commodity analyst with optionsXpress.

Copper traders shifted attention back to Europe's sovereign debt problems, leaving little time for relief over Washington's deal to raise the debt ceiling and avert a government default.

Copper futures pressed lower despite a weaker dollar, which tends to make the dollar-denominated contracts appear cheaper to investors holding foreign currencies.

The ICE Dollar Index was recently at 74.081, down from 74.472 late Tuesday in New York.

Meanwhile, a worker strike at the world's largest copper mine, Escondida in northern Chile, has entered its 13th day. Union leaders and management are due to meet Wednesday in the hopes of resolving the conflict over labor conditions, benefits and bonus pay.

Escondida accounted for around 7% of world copper production last year and has been losing around 3,000 metric tons of copper output per day of work stoppage. Last week mine operator BHP Billiton Ltd. was forced to invoke the "force majeure" clause, freeing it from meeting contract terms due to circumstances beyond its control.

 

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