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Copper continued lower alongside other base metals and commodities
Contact nowLONDON, March 20 (Thomson Financial) - Copper continued lower alongside other base metals and commodities, with a stronger dollar and recession fears weighing on sentiment ahead of the Easter break.
The rebound in the dollar, which was up 2 cents against the euro today, has pushed investors out of commodities who had been using them as a hedge against the greenback's recent weakness.
Fears other banks could be in trouble after the fire sale of Bear Stearns have also heightened widespread concerns over the US led economic slowdown, knocking investor confidence in the health of future metals demand.
While copper stockpiles monitored by the London Metals Exchange have continued their downward trend, pointing to a degree of tightness in the market that should support prices, macroeconomic fears are dominating for now.
At 2.06 pm, LME copper for three-month delivery was down at 7,685 usd per tonne against 7,980 usd at the close yesterday, while lead plunged over 6 pct to 2,660 usd per tonne against 2,836 usd.
'The weakness has continued overnight with the base metals off across the board and with the other commodities suffering too,' said BaseMetals.com analyst William Adams. 'The big question is whether the bull market from December now resumes or whether the turn has come.'
While the sharp declines are probably based on the view that betting metals higher given the uncertain demand outlook is unwise, he added, the future remains clouded.
Copper inventories dropped by 1,100 tonnes to 121,875 tonnes in today's report of LME-monitored warehouses. While these declines are viewed as supportive, lower copper prices at the Shanghai Futures Exchange may be pointing to a surplus of supplies in China.
'SHFE copper contract continues to trade at a substantial discount to LME for the first three months forward, hinting at the existence of substantial unreported stocks at China's east coast ports weighing on the local market,' said Sempra Metals economist John Kemp.
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