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BASE METALS: Comex Copper Slumps On European Debt Worries
Sep 15,2011 08:53CST
industry news
Source:SMM
Copper futures fell Wednesday as Europe's sovereign-debt crisis eclipsed supportive influence from strikes at two major copper mines.

Sep 14, 2011 NEW YORK (Dow Jones)--Copper futures fell Wednesday as Europe's sovereign-debt crisis eclipsed supportive influence from strikes at two major copper mines.

The most active contract, for December delivery, was 4.75 cents, or 1.2%, lower at $3.9225 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded September-delivery copper was 4.60 cents, or 1.2%, lower at $3.9100 a pound.

Copper prices saw little lift from reports of production disruptions at two of the world's largest copper mines. Unionized workers at Peruvian copper mining company Sociedad Minera Cerro Verde SA (CVERDEC1.VL) started an indefinite strike Wednesday as they lobby for higher pay. The company is one of Peru's largest copper miners, and Peru is second behind Chile in global copper output.

Elsewhere, thousands of unionized workers at Freeport McMoRan Copper & Gold Inc.'s (FCX) Grassberg mine in Indonesia are set to start a one-month strike Thursday as negotiations for higher wages stalled. If the strike takes place, it will be the second stoppage in three months at one of the world's biggest copper mines.

"Usually when we have these strikes the market immediately rallies...[but] the black cloud of sovereign debt in Europe has put a damper on commodities as a whole," said Rob Kurzatkowski, senior commodities analyst with optionsXpress.

Concerns about the spread of Europe's debt problems dominated trader attention after credit ratings company Moody's Investors Service cut the ratings of two major French banks. Moody's downgraded Societe Generale SA (GLE.FR, SCGLY) to Aa3 from Aa2 and lowered Credit Agricole SA (ACA.FR, CRARY) to Aa2 from Aa1, citing their holdings of Greek government bonds.

The rising likelihood of a Greek default worries copper traders because it could trigger a substantial slowdown in Europe's economic growth and damp the region's demand for copper. Europe as a region is often second behind China in global copper consumption, and lower demand there could alter the global copper market balance.

"The path of least resistance is lower still, particularly on copper, which looks especially vulnerable [...] as investors still seem to be concerned with its tight supply situation as opposed to the fact that demand for the metal could weaken noticeably in the months ahead," Edward Meir, senior metals analyst with MF Global, said in a note to clients.

 

Comex copper;European worries

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