US copper futures fell almost 5 percent on Wednesday, ending near eight-month lows as worries about the economy weakened investor appetite for risk. "It's more of the same," said Eric Wittenauer, futures analyst with A.G. Edwards in St. Louis, Missouri.
"We're going to continue to see prices under pressure in the weeks ahead as economic concerns and an emerging surplus continue to play out against one another, and that proves bearish for copper." Copper for December delivery settled down 13.90 cents, or 4.59 percent, at $2.8880 a lb on the New York Mercantile Exchange's Comex division, after dealing between $3.0425 and $2.8815, its lowest level since March 16.
"We're taking out some big numbers hitting some (sell) stops back down below the $2.95 level and on down to $2.90," said Scott Meyers, senior trading analyst with Pioneer Futures in New York.
"It's just nervous market conditions. We're in lock with the stock market. Stocks went down to 12,800 and copper's below $3.00, so unitl the stock market turns around, copper will be in the dumps." Volatility was high, with investors positioning themselves ahead of a holiday break in the US.
Open outcry trade on The New York Mercantile Exchange's trading floors will be closed on Thursday, November 22, for the US Thanksgiving holiday. Electronic trading of the Nymex/Comex products on CME Globex, and Nymex ClearPort will be open until 5:15 pm EST (2215 GMT).
Futures volumes estimated as of 1:00 pm EST reached 19,329 lots. Final turnover on Tuesday was healthy 33,770 lots. Open interest in Comex cpper futures fell 358 lots to 77,837 contracts as of November 21. Further fallout from the subprime mortgage crisis dampened sentiment on Tuesday, igniting another wave of risk aversion in financial markets on news that Freddie Mac, a major US mortgage finance company, reported a record loss.
Also on Tuesday, the United States Federal Reserve said the housing slump, tighter credit conditions and high energy costs would likely slow United States growth next year to between 1.8 and 2.5 percent, sharply below its 2.5 to 2.75 percent June forecast.
"We wonder if this is the next 'shoe to drop' and whether the government will soon have to step in with more money to shore up these entities, or barring that, formally get in the business of guaranteeing mortgages itself," Edward Meir, metals analyst with MF Global wrote in a daily market comment. News of labour protests at Chile's Colorado copper mine did little to stem the bearish momentum.
Workers at the mine, owned by global minor BHP Billiton, blocked access to the mine to protest the "unjustified" firing of fellow employees. BHP said its operations were normal and that the blockade had been lifted. Overnight inventory data showed another build in London Metal Exchange (LME) copper warehouse, up 1,425 tonnes to 182,700 tonnes on Wednesday, while Comex copper stock levels fell 356 short tons to 17,981 tons on Tuesday.
Copper for three-month delivery on the London Metal Exchange fell to $6,475 per tonne, it's lowest since March 16, and closed at $6,520, down $270 or 4 percent from Tuesday.
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