Copper set for worst performance since 2008 as China says ‘global recession is certain’
Frik Els | November 21, 2011 MINING.COM
Reuters reports copper hit its lowest in nearly a month on Monday as investors, already mired in worries over Europe’s debt, digested news that US plans to combat debt are in disarray and took in warnings from China about gloomy global growth prospects.
While US politicians’ inability to reach consensus on tackling the country’s debt problems was greeted with little surprise and the Europe crisis has been foremost in investors’ minds for months, the statements by China’s Vice Premier overnight really knocked sentiment. Wang Qishan said that a long-term global recession is certain to happen and China must focus on domestic problems. China is the world’s top copper consumer, taking in about 40% of the world’s copper versus Europe that accounts for 19% of demand.
In early morning trade Monday in New York December copper declined 2.9% to $3.30 a pound. Copper has declined 22% to $7,525 a metric ton on the London Metal Exchange this year, heading for the first annual drop since 2008.
Reuters reports with so little to cheer on the macro side, investors took some comfort from data showing copper stocks, seen to signal demand strength, continued their relentless slide in LME warehouses.
On Friday Bloomberg reported 11 of 23 copper traders surveyed expect the metal to decline, the second consecutive week that their outlook worsened and the highest proportion since Sept. 23. The last time so many were bearish, prices dropped 4.6% the following week.
