The Australian reported that copper futures slumped for a third session as the widening euro zone debt crisis and worries about renewed recession in the developed world caused traders to cut their holdings of the growth sensitive industrial metal.
Copper for December delivery, the most actively traded contract fell US6.85 cents or 1.7% to USD 4.056 a pound on the Comex division of the New York Mercantile Exchange, the lowest ending price since August 24th 2011.
Global equities markets slumped at the beginning of the week, as worries about the ability of European Union leaders to manage the currency union's debt crisis mounted. Markets were already on edge following Friday's report that the US economy failed to add jobs in August.
Growth sensitive assets such as copper, crude oil and US equities all fell. The industrial metal in particular tends to react to market sentiment and changes in the growth outlook because of its widespread uses in manufacturing and construction.
Mr Michael Rose head of trading with brokerage Angus Jackson said that "There is just this manufacturing and industrial malaise. The bleak outlook for the US housing and labour markets left traders little reason to be optimistic about the country's future copper demand.
Analysts with the investment bank see copper prices averaging USD 4.13 per pound this year before falling to USD 3.80 a pound in 2012. The bank's previous forecasts expected copper to average USD 4.40 a pound this year and USD 4.27 a pound in 2012.
Citi analysts said that compared with 2011 we expect slower demand growth in 2012 across the major copper markets with Europe, China and US demand growth slowing markedly.
Copper prices touched record highs in February and seemed poised to test those levels again in July on the view that supply growth would fail to meet rising global demand. But the chance of renewed recession in the US and Europe has outweighed those supply concerns, dragging copper from its highs in July near USD 4.50 a pound to below the USD 4 mark last month.
A union spokesman said that workers at Freeport McMoRan’s massive Grasberg mine in Indonesia may hold a 1 month strike beginning September 15th 2011 as labor contract negotiations appear deadlocked. A July work stoppage at the mine led to 35 million pounds of lost copper production.
