Oct 23, 2012 (Dow Jones) NEW YORK--Worries about Europe's financial system and a set of disappointing corporate earnings reports pushed copper prices to six-week lows Tuesday as investors reassessed the demand outlook for the industrial metal.
The most-actively traded copper contract, for December delivery, fell 5.25 cents, or 1.5%, to settle at $3.5695 a pound on the Comex division of the New York Mercantile Exchange, the lowest price since Sept. 6.
Copper's slump came along with a rout in many other commodities and U.S. equities markets on worries about the pace of economic recovery. Third-quarter earnings at some major U.S. manufacturing firms missed expectations recently, and on Tuesday shares of industrial conglomerates 3M (MMM) and DuPont (DD) both slumped after disappointing reports.
Copper is widely used across industries, making the metal sensitive to shifts in the growth outlook. Traders with RBC Capital Markets said in a note that investors were cashing out on the view that central-bank support for the economy wouldn't be enough to prop up metals demand in the near term.
Many commodities had surged after the disclosure of central-bank stimulus programs in August and September. The U.S. Federal Reserve, along with central banks in Asia and Europe, in recent months disclosed monetary-easing measures designed to stoke economic growth.
"Prices have since given back more than half of these gains," said Edward Meir, an analyst with INTL FCStone, in a note. "And we suspect there will be further room to go."
Copper futures had traded lower in Europe after the Bank of Spain said the country's recession accelerated in the third quarter. Moody's Investors Service late Monday downgraded five Spanish regions.
Europe's festering banking crisis has kept pressure on copper prices this year. Recessions in much of the euro zone have hit global trade and limited demand for the metal in products such as autos, home appliances and power cables. The crisis there has also made investors wary of holding euro-denominated assets, propping up the U.S. Dollar and in the process dragging on dollar-denominated copper by making the futures appear more expensive for buyers using other currencies.
Traders were also awaiting a reading on China's manufacturing sector, set for release on Wednesday. China is the world's largest copper consumer.
Copper settlements (ranges include electronic and pit trading):
Oct $3.5760; down 4.95 cents; Range $3.5695-$3.5840
Dec $3.5695; down 5.25 cents; Range $3.5480-$3.6410