Comex Copper Falls Slightly as Euro Backs Down
Source: Dow Jones Newswires, Allen Sykora (5/12/10)
"Copper futures are slightly softer after giving up overnight gains when the euro did likewise"
Around 9:29 a.m. EDT (1329 GMT), copper for July delivery fell 1.30 cents, or 0.4%, to $3.1935 per pound on the Comex.
Copper and other base metals initially drew support overnight when the euro staged a recovery against the USD, traders said. The euro got as high as $1.2740, compared to $1.2700 late Tuesday, after Spain's pledge to cut spending. A softer dollar helps commodities by making them less expensive in other currencies.
The market also drew support from stronger-than-forecast industrial production data in Europe, analysts said.
But July copper has since backed down by roughly a nickel from its $3.2440 peak as the euro also pulled back to $1.2678.
Traders say there is potential for a further retreat, at least in the short term, due to a number of macroeconomic issues, with the main one being the ongoing debt issues in some European nations. Some of the recent pressure on copper also came from concerns that China may further tighten monetary policy, particularly after a rise in the Consumer Price Index reported on Tuesday. The country is especially important to the copper market since it is the world's largest consumer of the metal.
The copper market also lost another potentially supportive influence when contract workers at the Collahuasi copper mine in Chile ended a strike that began Friday. Barclays had estimated the work stoppage was resulting in a loss of at least 1,500 metric tons of copper production per day.
Continuing declines in London Metal Exchange warehouse stocks are supportive for copper, Barclays Capital said in a research note. LME copper warehouse stocks fell 1,075 metric tons to 486,375.