Copper prices fell to the lowest since July 2005 on mounting concern that the global recession may further weaken demand for the metal used in pipes and wires.
Freeport-McMoRan Copper & Gold, the world’s largest publicly traded copper producer, suspended its dividend and said it will reduce output in the next two years. The price of the metal has plunged as much as 64 per cent from a record in May. The Reuters/Jefferies CRB Index of 19 raw materials slipped as much as 1.2 per cent, touching the lowest since November 2002.
Copper may drop to $1 a pound as consumption wanes, said Gijsbert Groenewegen, a fund manager at Gold Arrow Capital Management in New York. “Copper is not going to turn around anytime soon.”
Copper futures for March delivery tumbled 4.6 cents, or 2.9 per cent, to $1.5545 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $1.516, the lowest for a most-active contract since July 7, 2005.
More than $31 trillion has been erased from the value of global equities as the collapse of the US subprime mortgage market sparked financial turmoil worldwide. Copper inventories monitored by the London Metal Exchange (LME) have more than doubled since June 30. In China, the world’s biggest copper consumer, industrial production increased in October at the weakest rate in seven years, surveys showed last month.
“The financial crisis has spread just about everywhere, and we’re seeing global problems,” said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Copper demand is going to continue to slow down.”
Copper prices reached an all-time high of $4.2605 on May 5 in New York. The metal last traded below $1 in December 2003.
On the LME, copper for delivery in three months fell $109, or 3.1 per cent, to $3,446 a tonne.
