Sep 22, 2011 NEW YORK (Dow Jones)--Copper futures plunged Thursday, extending their earlier losses, as investors bet that slowing growth and struggles facing the global financial system would hit demand for industrial metals.
The most actively traded copper contract, for December delivery, was recently down 29.55 cents, or 7.9%, at $3.4685 a pound on the Comex division of the New York Mercantile Exchange. Futures fell as low as $3.453 a pound, the lowest intraday price since August 2010.
Reports released Thursday on manufacturing in the euro zone and top copper-consumer China showed activity contracted this month, adding to fears that the affects of strained financial markets may spread to the industrial sector.
"Copper is telling you that the odds of a recession are increasing," said Adam Klopfenstein, a senior market strategist with MF Global. "It's hard to paint a positive picture" for the industrial bellwether with the current slate of worries about the global economy, he said.
Copper is sensitive to the economic outlook because it is used across a wide range of industries, and futures were already under pressure this week from a weaker growth outlook.
A bleak economic outlook voiced Wednesday by the Federal Reserve rattled some investors, analysts said, and the central bank's newly announced program to shift its portfolio toward longer-term government debt failed to support prices of risky assets.
The Dow Jones Industrial Average was recently down 3.8% at 10701, and crude oil fell to one-month lows, recently trading down 6.2% at $80.59 a barrel.
Goldman Sachs Thursday lifted some copper-price forecasts, saying that a tight supply and demand balance should keep the market supported despite the metal's recent plunge. The investment bank said it would take a global recession or financial crisis to derail its view that higher prices are ahead.
"Expectations of continued strong economic growth in emerging markets and China in particular, continue to suggest tightening copper fundamentals that will push prices higher over the next year," Goldman analysts wrote.