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BASE METALS: Copper Falls On Global Growth Worries
Aug 8,2011 09:47CST
industry news
Source:SMM
Copper prices declined Friday despite better-than-expected U.S. employment data, as concerns about global growth linger.

Aug 05, 2011 (Dow Jones Commodities News via Comtex) -- --Comex September copper down 6.45c, or 1.5%, at $4.1710/lb.

--U.S. jobs data fails to spark confidence

--Worker strike at Escondida, world's largest copper mine, ends after 15 days

By Tatyana Shumsky
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper prices declined Friday despite better-than-expected U.S. employment data, as concerns about global growth linger.

The most actively traded contract, for September delivery, was recently down 6.45 cents, or 1.5%, at $4.1710 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper down 5.55 cents, or 1.3%, at $4.1755 a pound.

U.S. non-farm payrolls rose by 117,000 in July, beating expectations of a 75,000 increase, a monthly report from the Commerce Department showed. The unemployment rate, collected through a separate survey, fell to 9.1% in July from 9.2% the prior month.

Copper futures initially pared losses on the report, but then slumped lower as the stock market relinquished its gains. Investors remain concerned that the U.S. economy is in decline after a string of downbeat economic data stifled confidence.

Moreover, Europe's sovereign debt problems remain in traders' cross hairs as larger euro-zone economies like Italy and Spain are under pressure to rein in their debts and spending.

"Copper is very economically sensitive, because when the economy slows nobody is building or buying computers," said Sterling Smith, analyst with Country Hedging.

The metal is widely used in everyday goods like iPhones, air-conditioners and cars, and demand for copper tends to wane when business activity is weak.

Despite the recent declines, copper prices have drawn support from a string of production disruptions at major copper mines. Copper mine output has struggled to keep up with growing global demand for the industrial metal and many analysts are forecasting a production shortfall for both 2011 and 2012.

Workers at the world's largest copper mine, Escondida in northern Chile, reached a wage deal Friday and ended a 15-day strike that had stalled output. Escondida accounted for almost 7% of global copper production last year.

Moreover, sustained copper demand from top consumer China has kept copper prices buoyed above the $4 level for much of this year.

"These are still very high prices that reflect exceptionally global demand, and that isn't going to change any time soon, but that doesn't mean prices go up uninterrupted," said Mike Frawley, global head of metals for Newedge Group.

 

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