- Copper Collapse Latest Blow in Commodity Smackdown Barrons.com q 15 hrs ago
Copper Collapse Latest Blow in Commodity Smackdown
By Chris Dieterich
- Reuters
- A worker monitors a process inside a copper refinery.
Oil hasn’t been the only commodity in free fall in recent months.
Copper prices have also been sliding since the middle of the summer over concerns that slowing global growth might curb industrial demand for the metal, which is sometimes called “Dr. Copper” for its sensitivity to economic trends.
Copper prices buckled in overnight, down nearly 9% at one point in London. Copper prices fell so far in Shanghai that they tripped a circuit breaker, according to Alex Davis and Chanyaporn Chanjaroen at Bloomberg. It was down 5.2% at $5,554.00 a metric ton in morning European trade.
One proximate trigger for selling copper appears to be the World Bank’s cut to its 2015economic growth outlook to 3% versus 3.4%. Another, Bloomberg reports, is thinning demand forecasts in China.
Whatever the cause of the selling, The Wall Street Journal reports that it started in Asia and rippled into Europe’s markets. This from Ese Erheriene and Biman Mukherji:
“The heavy selling in the East seems to have been largely driven by investors that opted to unwind bets in the copper market to prevent further losses. Once copper fell below the level of $6,000 per tonne on Tuesday, it sparked a wave of selling as investors scrambled to close out those positions.By the time trading moved to London on Wednesday morning, 25,000 lots had already been bought or sold in Asia. This is the amount normally sold during a full day’s trading across all time-zones. Selling volumes weren’t as high in London.”
The $48 million iPath Dow Jones UBS Copper Subindex Total Return ETN (JJC) is down 3.8% in early trading so heavy that nearly 60% of the average full-day volume traded in the first 10 minutes of trading, according to FactSet. The $2.7 million United States Copper Index Fund (CPER),which seldom trades, is down more.
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