Copper Marks Fresh 1-Month Low

Oct 15, 2012 (Dow Jones) NEW YORK--Copper futures edged to a one-month low Monday as a stronger dollar and concerns about demand weighed on prices, though stronger equities offset some of copper's declines.

The most actively traded contract, for December delivery, slipped 0.15 cents to $3.7015 a pound on the Comex division of the New York Mercantile Exchange. This was the lowest price since copper settled at $3.6925 Sept. 12.

Copper futures spent the bulk of the trading day in negative territory, yielding to pressure from a stronger dollar. The greenback rallied against the euro, pushing the common European currency to a low of $1.2891. Dollar-denominated copper futures become more expensive for traders who use other currencies when the greenback strengthens, dissuading those participants from the market.

However, an afternoon rally in equities helped copper recoup much of the lost ground. The Standard & Poor's 500 stock index was recently up 0.6% at 1437.66, after touching lows of 1427.24.

Copper's 30-day average correlation to stocks is currently at +0.8, on a scale where +1 means a perfect direct relationship and 0 denotes no relationship.

Copper and equities tend to move in the same direction as both are seen as indicators of future economic performance.

Earlier in the day, copper futures posted sharp declines as traders worried that demand from China would sputter as its economy continues to slow. China consumes about 40% of the world's copper output, the largest single destination for the metal.

Analysts at Citigroup noted that copper inventories at Shanghai Futures Exchange warehouses rose 12% last week to 181,514 tons, the highest stockpile level since May.

They added that physical copper premiums, a convenience and delivery surcharge paid in addition to the futures price, have started to decline in China "which suggests plentiful availability of copper."

Copper settlements (ranges include electronic and pit trading):
Oct $3.7115; down 0.30 cents; range $3.6700-$3.7125
Dec $3.7015; down 0.15 cents; range $3.6460-$3.7105