US copper futures settled at a one-month low on Friday as investors liquidated holdings in the industrial metal after economic data raised concerns of a growth slowdown in the world's largest economy, analysts said.
"I would imagine the lower-than-expected US employment numbers this may have just indicated an economy that may slow further," said Patricia Mohair, commodity markets specialist at Canada's Scotiabank Group.
"But, keep in mind that it isn't US demand that has been driving copper anyway unless the US slowdown has a much wider implication for the global economy than it has had so far this year," Mohair said.
Copper for September delivery tumbled 9.40 cents, or 2.6 percent, to finish at $3.4790 a lb. on the New York Mercantile Exchange's Comex division, its lowest close since June 29. Trading ranged from a low of $3.47 to a session peak of $3.5750.
Traders believed there was still some room left on the downside after the market's break below key support at $3.50, but that any further losses would likely be limited. "I can see us dropping another couple of cents on some follow-through selling, but I'd look for buyers to move in at around the $3.40 level," said one.
Final estimated futures volumes totalled 18,772 lots. US employers expanded their payrolls in July at the slowest pace since February and the jobless rate ticked up to its highest since the start of the year, a government report showed on Friday.
In another sign of slowing growth, the Institute for Supply Management reported signs of a weakening service sector as its index of July activity fell to 55.8 from 60.7 in June.
Any reading over 50 indicates growth. Problems in the housing sector, where lenders are encountering difficulties with rising mortgage defaults and prices are declining in many metro markets, appeared to spread into hiring as construction businesses cut jobs.
The Labour Department said employers added 92,000 jobs last month. It also revised down its estimates for job creation in each of the two prior months by a total of 8,000 to 126,000 in June from a previously reported 132,000 and to 188,000 in May instead of 190,000.
Sentiment was bruised further after overnight inventory data showed copper stocks in warehouses monitored by both the London Metal Exchange and the Shanghai Futures Exchange climb.
LME-monitored warehouse stocks jumped 2,225 tonnes to 105,650 on Friday, while weekly data from China showed inventories increase 1.6 percent to 91,563 tonnes from 90,089 tonnes the previous week.
Comex stocks bucked the trend, falling by 112 short tons to 21,655 on Thursday. John Read, head of metals strategy with investment bank UBS, said it was hard to support a case for a shortage in copper when total exchange stocks stood at 217,000 tonnes, versus 158,000 tonnes on the same day of 2006 and 76,000 tonnes in 2005.
Meanwhile, a strike that has stopped production at Group Mexico's massive Cananea copper mine will continue even if the government declares the stoppage illegal, Mexico's miners union said on Friday.
Top union official Carlos Paved said workers would seek an injunction if the Labour Ministry ruled against the strike at Cananea and two other mines owned by Group Mexico. London Metal Exchange copper for delivery in three months settled at $7,665, up from one-month low of $7,650.
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