Forexpros – Copper futures declined in quiet trade on Tuesday, as concerns over the outlook for the global economy dampened sentiment on the industrial metal.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.431 a pound during European morning trade, dropping 1.1%.
It earlier fell by as much as 1.7% to trade at a session low of USD3.392 a pound.
With the London Metal Exchange remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions.
Copper’s losses came amid lingering concerns over the threat of mass credit ratings downgrades for euro zone countries, with Standard & Poor’s yet to announce if it will cut ratings on any of the 15 countries it has on credit watch negative.
Two independent European government sources said Friday that S&P was not expected to release its verdict on euro zone debt ratings until January.
Meanwhile, investors were eyeing Italian three and ten-year bond auctions later this week. The yield on Italy’s ten-year bonds rose to as high as 7.13% in early European trade, topping the critical 7% threshold widely viewed as unsustainable in the long-term.
Europe as a region is second after China in global demand for the industrial metal and worries over its economic growth have kept copper prices under pressure in recent weeks.
Prices came under further support after China’s Industry Minister Miao Wei said earlier that the nation’s industrial output was expected to slow in 2012, growing 11% and easing from an estimated 13.9% in 2011.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Copper prices have lost nearly 25% since the start of 2011 as a deepening euro zone debt crisis and fears over a ‘hard landing’ in China pushed investors to liquidate assets such as industrial metals.
Copper is sensitive to the economic growth outlook because of its widespread uses across industries.
Elsewhere on the Comex, gold for February delivery fell 0.6% to trade at USD1,599.35 a troy ounce, while silver for March delivery dipped 0.35% to trade at USD28.99 a troy ounce.
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