Copper continues to drop

Strong dollar tarnishes red metal
Base metal prices continued to drop on Friday, 15 January 2010. Prices fell as dollar headed up.
At USA, copper futures for March delivery ended lower by 1.7 cents (0.4%) to 3.337 a pound. For the week, copper ended lower by 3.5%. This year, till date, copper is lower by 1.7%. Copper ended FY 2009 higher by 140%.
At LME, copper for delivery in three months ended lower by $52 (0.7%) at $7,438. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. The metal was also pushed higher by record first-half imports to China, the world's largest user.
In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.7%.
The Federal Reserve in US reported on Friday, 15 January, 2010 that output of the nation's factories, mines and utilities rose a seasonally adjusted 0.6% in December, 2009, the sixth increase in a row.
Separately, the Commerce Department in US reported on Friday, 15 January 2010 that its consumer price index increased 0.1% in December 2009, down from a 0.4% advance in November. This is the lowest rate since July and is slightly below expectations of a 0.2% rise.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
Among other metals traded in the LME on Friday, lead ended almost unchanged to end at $2,461 a ton and zinc dropped 1.3% to end at $2,478.5 a ton. Nickel gained 0.2% to end at $18,350. Aluminium dropped 0.3% to end at $2,316 a ton.