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Copper slumps to four-year low Posted: Wed, 24 Dec 2008 [miningmx.com] -- COPPER fell almost five percent to a four-year low on Tuesday on dismal US housing data and impatience with the pace of China's economic stimulus. New York traders stepped up the selling after US data showed sales of newly built single family homes fell 2.9% in November, to the weakest level in 17 years. Sales of existing homes fell 8.6 percent according to the National Association of Realtors. The government also released its final report on third-quarter gross domestic product, showing economic growth contracted 0.5%, unchanged from last month's estimate and reinforcing the bleak demand picture for raw materials like copper. Copper for March delivery dropped 6.45 cents, or 4.8%, to close at $1.2810 a lb on the New York Mercantile Exchange's Comex division. That extended the early selling on the London Metal Exchange, where three-month copper closed at $2,870 a tonne, down from $2,960 on Monday. It touched its lowest price since October 2004. "The amount of housing inventory is going to take a long while to chew through, so that's going to keep a weight on this market for quite a while, said Sterling Smith, vice president with FuturesOne in Chicago. China trimmed interest rates on Monday in the latest step to fend off a deepening economic slowdown, but the cut, the fifth since mid-September, was smaller than many analysts had expected. "The interest rate cut was expected and it was not a very large cut," said Stephen Briggs, analyst at RBS Global Banking & Markets. "I don't think anybody feels that it's enough to change the outlook for China ... (or) that it has had a great deal of effect." Prices of the metal used in power and construction have fallen about 65% since a record high of $8,940 in July. The world refined copper surplus rose 67 percent to 120,000 tonnes in the first nine months of the year as weak demand in Japan, the European Union and the United States more than offset strong Chinese demand, the International Copper Study Group (ICSG) said. "The move down sort of signals what has been going on in the several previous months," said Michael Khosrowpour, an analyst at Triland Metals on copper. "We are seeing a continuation of a trend lower as prices seem to adapt to a global recession." On the copper price going forward, he said things may pick up in the second and third quarter of 2009. "Prices will start coming back ... possibly $5,000 by the end of next year." Aluminum choppy Volatile aluminium rose 1.9% to a high of $1,585 but eased back to close at $1,560 in LME rings from $1,555. The metal has been hit hard by recent terrible news on car sales. Click Here to subscribe to our daily newsletter
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