Copper sank to a one-month low in New York futures trade on Friday after a huge surge in London stockpiles and a deteriorating economic outlook drove investment away from the industrial metal. Copper for March delivery fell 5.50 cents, or 3.7 percent, to close at $1.4160 a lb on the New York Mercantile Exchange's COMEX division. Session range from $1.4695 to $1.3950, the contract's lowest price point since January 23.
Copper could be in store for a long period of congestion between $1.30 and $1.60 - Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto. COMEX estimated copper futures volume at 14,301 lots by 12 pm EST (1700 GMT). Final volume on Thursday hit 22,923 lots. Open interest dropped 2,263 lots to 87,807 contracts open as of February 19. Copper's losses tied to weakness in equities and growing uncertainties about how deep the global economic recession will be - analysts.
"As stocks sell off and GDP continues to decline, it seems as if the market is re-pricing assets including copper to meet with new levels of consumer demand." - Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California. The US Federal Reserve cut its 2009 economic forecast sharply, saying the economy was likely to shrink by between 0.5 percent and 1.3 percent this year, weighed down by rising unemployment, frozen credit and the housing crisis.
Rising supplies in London warehouses reflect copper's bearish demand outlook - analysts. London Metal Exchange copper warehouse stocks surged 17,350 tonnes to 545,600 tonnes on Friday, their highest level in five years. COMEX copper stocks added another 179 short tons on Thursday, bringing total inventory levels to 42,110 short tons. In Shanghai, copper inventories fell 11 percent from a week earlier to 30,105 tonnes. This was the first decline since mid-January when stockpiles were just half the current level.
World copper market in a surplus of 147,000 tonnes in the January-November 2008 period versus 143,000 tonnes during the same period in 2007 - the International Copper Study Group (ICSG). China's State Reserves Bureau (SRB) is believed to have bought over 100,000 tonnes of refined copper from South America plus further unknown volumes from Europe - Norddeutsche Affinerie, Europe's largest copper producer. London Metal Exchange copper for three months delivery ended down $140 at $3,150 a tonne. Range from $3,139 to $3,300.