Unless the eurozone gets its act together and contain at the
soonest time possible its growing fiscal crisis, prices of
commodities such as copper and iron ore will see little stability
in the coming weeks or even months.
Copper prices plummeted hard at nearly 7 per cent on Thursday,
its biggest one-day collapse in four weeks.
Prices of iron ore has been dropping in recent weeks and is
expected fall down further as global demand for the steel making
ingredient continues to slack, primarily triggered by a weakening
"Copper tends to lead other markets. If copper prices are
starting to begin another leg lower now - nearly 10 per cent in
just two days - that's not just a blip on the radar ... it is
indicative of investors' concern about the global economy," Adam
Sarhan, chief executive of New York-based Sarhan Capital said in
CFO World News.
"Copper right now is signaling that the global economy might
be in for a double dip."
London Metal Exchange (LME) benchmark copper dropped $US475 or
6.6 per cent to finish at $6,735 per tonne, its biggest daily
decline since Sept 22, when it fell over 7.5 per cent.
In New York, the key December COMEX contract dove 20.05 U.S.
cents or 6.2 per cent to settle at $3.0575, close to the bottom
end of its $3.2350 to $3.0310 session range.
Volumes perked up Thursday as the selling intensified. Close
to 64,000 lots traded in New York, nearly 12 per cent above the
30-day average, the CFO World News quoted Thomson Reuters
Copper stretched a reversal from Monday's three-week high near
$3.50 in New York and $7,660 in London, leaving both markets
vulnerable for a retest of their 2011 lows, at $2.99 and $6,635,
Meanwhile, iron ore prices have fallen by about 15 per cent in
recent weeks to just below $150 a tonne. A number of analysts had
predicted it will drop lower to $140 by yearend. That would be
represent a 30 per cent plunge from the $192 year-to-date high
recorded in February, not far from a record $202 in March
Steel makers have eased down on iron ore purchases even as
global iron ore miners continue to ramp up production of the
China this week reported its economy grew by 9.1 per cent in
the third quarter, its slowest since 2009. While relatively
stronger compared with other more developed economies, any sign
of downtrend activity in China sends commodities to palpitate as
the sector relies heavily on the appetite of the world's
second-largest economy to sustain its products.
"After months of very benign price movements over 2011,
China's steel and iron ore prices have lurched downward in recent
weeks, and the declines seem to be gathering pace," analysts at
Macquarie Capital Securities Ltd. said in a note to CTV News.
"It will be hard to see a strong turnaround in the iron ore
price until mills have destocked the steel they are holding on
site, and for this to happen we will need to see production