Copper and Aluminum Prices To Drop On Taper, Weaker Chinese Demand

Michael Teague |

Copper futures due for delivery in December dropped 1 percent to $3.33 per-pound to begin the week of trading on Monday, on concerns about weakening demand for the metal through the remainder of 2013.

With a growing certainty across markets that the Federal Reserve will begin its gradual reduction of stimulus spending from $85 billion to $65 billion per month starting in September, analysts have worried that the resulting increase in the strentth of the dollar will send commodity prices downwards. Edward Meir, an analyst at New York’s INTL FCStone was quoted in a report as saying that a September taper would “likely result in a stronger dollar and a rollback in many commodity prices, including base metals.”

Futures have fallen nearly 8 percent so far in 2013, though prices have been on an upward trajectory for first half of August, due to better than expected economic data coming out of China. The country is the world’s largest consumer of copper, and trade figures released on Aug. 8 sent copper prices and related ETFs surging as expectations for a slow-down in construction were shown to be overstated.

The world’s largest mining companies, Rio Tinto Plc. (RIO) and BHP Billiton (BHP) posted significant increases in copper production for the second quarter. This production increase has led to more or less of a consensus that 2013 will see a stockpile surplus that will send prices lower either way. Furthermore, analysts have still been skeptical about the sustainability of the Chinese growth that has propelled copper.

Other base metals were feeling the pressure on Monday as well, with aluminum down 1.3 percent to $1,919.25 per ton on the London Metal Exchange, followed by zinc, nickel, and tin. United Rusal Co., the world’s largest producer of aluminum, said that announced reductions to its aluminum production targets in the wake of second-quarter losses.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Spotlight

BiondVax Pharmaceuticals Ltd.

Biondvax Pharmaceuticals Ltd Ltd is a clinical stage biopharmaceutical company. The Company is engaged in developing, manufacturing and commercializing immunomodulation therapies for infectious diseases.

Events

EQUITIES Emerging Growth and Innovation Forum

EQUITIES Inaugural Emerging Growth and Innovation Forum at Disruptive firm MRY New York City's Flatiron District. The forum is on February 24th from 12:00 pm to 6:00 pm with a…

Learn more

Research

MagneGas Corporation (MNGA)

MagneGas Corporation is an alternative energy company that creates a system that produces hydrogen based fuel through the gasification and sterilization of liquid and liquid waste. ($49 USD)

Learn more

Private Markets

SU Labs Accelerator Seed Fund

We're a fiercely passionate community of entrepreneurs leveraging rapidly accelerating technologies to create a brighter future. Join us in fostering innovation, driving impact and funding the future.

FAB Financial Inc.

Banking is broken. Years ago people who needed business advice would turn to their local bank manager for help. The banker was thought of as a trusted member of the…