Copper Prices Plunge
A drop in new home sales in the U.S. triggers a strong decline in copper prices as expectations had been construction would continue to drive copper demand, which obviously isn't the case, as the economy continues to contradict the official assertion that the recession is over and a recovery is underway.
January copper futures plunged 3.4 percent, the largest fall in about four months, ending the session at $3.2145 a pound Comex division of the New York Mercantile Exchange. Also falling even a worse percentage was Benchmark March copper, dropping 3.5 percent to $3.2225.
Copper futures for the March contract continued to get hammered in electronic trading after-hours, as prices plummeted even further to $3.1740.
Other concerns impacting copper prices falling was fears interest rates will be raised, which would help strengthen the U.S. dollar. China's recent inclination to tighten things up has also weighed on the copper market, with fears they may start raising interest rates as well to cool off their economy. That would hamper the expected demand for 2010 for copper use.
December sales for single-family homes fell of the cliff, plunging by 7.6 percent from November. Taking into consideration analysts were looking for an increase of 2.8 percent any you have about a 10 percent disconnect between estimates and reality for new home sales.
Another factor is while these realities are being faced and moving the price of copper, warehouse stocks continue to rise as demand lowers, putting even more pressure on the price of copper holding up.
Copper Prices Fall