BLBG: Copper Falls to Lowest Since May 2005 on Job Cuts, Recession
By Millie Munshi
Dec. 5 (Bloomberg) -- Copper prices tumbled more than 6 percent, extending a slide to the lowest since mid-2005, on signs of a deepening U.S. recession.
U.S. employers eliminated jobs in November at the fastest pace in 34 years, and the unemployment rate jumped to the highest since 1993. Copper was down for the sixth straight session, plunging 68 percent from a record in May.
“This market is so sensitive to any kind of bad economic news,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. “With all the bad news out there, copper can really only go down.”
Copper futures for March delivery fell 9.6 cents, or 6.5 percent, to $1.3735 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the metal touched $1.356, the lowest for a most-active contract since May 20, 2005. The price dropped 19 percent in six days, the longest slide in almost a year.
“I don’t see any reason why copper couldn’t fall back to $1,” Smith said. “The sentiment in the market is terrible, and there is no good economic news.”
The global recession will reduce demand for industrial commodities, including copper, through 2010, Christoph Eibl, who helps manage more than $1 billion at Tiberius Asset Management, said yesterday in an interview in New York.
“You don’t want to be invested in anything that has a high correlation with the economy,” Eibl said.
Production cuts have failed to boost copper prices as investors focus on prospects for the economy, RBS Global Banking & Markets said in a report.
Freeport Output
Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly traded copper producer, said this week that output next year will be 5 percent less then forecast and 11 percent lower in 2010. Should copper drop to “significantly” less than $1.50, additional cuts may be made, Freeport said.
On the London Metal Exchange, copper for delivery in three months declined $220, or 6.7 percent, to $3,050 a metric ton ($1.38 a pound).
Barclays Capital lowered its forecast for copper prices by 24 percent, citing “clear signs of steep decline in global copper demand.”
The metal for immediate delivery will average $2,900 a ton in the first quarter, analyst Gayle Berry said in a report yesterday. The forecast last month was $3,800 a ton.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net
