Copper drops for second straight day

Prices drop as world gears up for winding up of stimuli plans
Base metal prices ended lower for the second consecutive day on Wednesday, 27 January 2010. Prices dropped due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand of metals in coming months. Winding up of stimulus plans across other parts of the world also hammered base metal prices.
At USA, copper futures for March delivery ended lower by 12 cents (3.5%) to 3.2225 a pound. Last week, copper ended lower by 0.6%. This year, till date, copper is lower by 4.5%. Copper ended FY 2009 higher by 140%.
At LME, copper for delivery in three months ended lower by $151 (2%) at $7,230. 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.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
The Federal Reserve's statement on U.S. monetary policy came out in the noon hours today. The central bank, as expected, kept its federal-funds rate unchanged on Wednesday and said it would keep them exceptionally low for an extended period.
In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose marginally. The dollar gained almost 0.4% against the euro.
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.
At the MCX, copper for February delivery closed lower by Rs 14 (4%) at Rs 331.2/Kg. Prices rose to a high of Rs 345.05/Kg and fell to a low of Rs 330/Kg during the day's trading.
Among other metals traded in the LME on Wednesday, lead ended 1.5% lower at $2,168 a ton and zinc dropped 1.2% to end at $2,291 a ton. Nickel dropped 1.1% to end at $18,005. Aluminum shed marginally to end at $2,221 a ton.