Dr. Copper Points to a Slowing Economy
Copper prices have fallen 21% since reaching a high of $3.9785 per pound in February 2012. Copper has been called the commodity “with a doctorate in economics” because its price tends to reflect the health of global manufacturing. Prices have fallen 13% this year alone. China is the top consumer of copper in the world, accounting for 40% of global demand. A slight contraction in China’s economy since the last quarter of 2012 is obviously a concern to traders. Supplies of copper stored in warehouses overseen by the London Metal Exchange (LME) are up 92% this year as a result of production by new and expanded mines. However, mines are not expected to delay new projects or shut down production unless prices approach $2.80 per pound, according to one industry expert. With prices settling at $3.1515 per pound last week, there is still a lot of room for prices to fall. The old stock market adage about not trying to catch a falling knife comes to mind right now.