Copper Prices Drop to 4-Month Low
Copper prices fell to a 4-month low on Friday after a decline in Chinese growth and the EuroZone debt crisis reduced demand.
As Greece investigates options for leaving the European Union, manufacturing demands in Europe fell to their lowest levels in 3 years. Copper is a very important component in manufacturing.
Chinese manufacturing has also slowed down. China consumes 40% of the world’s copper, so this is causing the price of copper to decline.
Copper is up 0.7% this year, to $7,654 per ton according to London Metal Exchange pricing but is currently only at $7,503 – the lowest all year.
Copper supplies have been shrinking for 3 straight years as demand exceeds supply by 158,000 tons per year. This is still down from 213,000 tons per year in 2011, however still represents outpaced demand. At the current rate, copper supplies will be gone by the end of 2014.
Many manufacturers have foreseen this supply-side crisis, and have been stockpiling copper in warehouses – mostly in China. These warehouses are estimated to contain 1,000,000 to 800,000 tons of copper.
Goldman Sachs analysts expect copper prices to rise to $9,000 per ton in 3 months due to strong growth in consumer appliances and automobiles in China.
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