Copper Touches Four-Month Low as Cyprus Fuels Europe ConcernsJoe Richter and Maria Kolesnikova
Copper fell to a four-month low in New York as a levy on bank deposits in Cyprus stoked concern that Europe’s debt crisis will worsen.
Depositors in Cypriot banks will be forced to share the cost of the latest bailout under an accord reached March 16 by euro-area finance ministers. Copper also slid as inventories tracked by the London Metal Exchange climbed for a 23rd session.
“The Cyprus announcement is another painful reminder of how vulnerable Europe is, and it has spooked investors,” Harry Denny, a broker at Hoboken, New Jersey-based PVM Futures Inc., said in a telephone interview. “Copper stocks continue to grow, so you can’t look to supply and demand fundamentals for support either.”
Copper futures for delivery in May tumbled 2.6 percent to settle at $3.428 a pound at 1:12 p.m. on the Comex in New York after touching $3.4175, the lowest since Nov. 9.
The euro slid the most in 14 months against the dollar. A stronger greenback saps demand for commodities as an alternative investment.
Money managers increased net-short positions, or bets on lower copper prices, by 2.3 percent from a week earlier to 16,764 Comex futures and options contracts as of March 12, according to the U.S. Commodity Futures Trading Commission.
Inventories monitored by the LME rose 3.4 percent to 543,925 metric tons, daily exchange figures showed.
Stockpiles are rising “at an alarming rate” and global inventories including metal in bonded warehouses in China are at an all-time high, Barclays Plc said in a note today. Supplies of copper tracked by the LME more than doubled since the end of November to the highest since March 2010.
On the LME, copper for delivery in three months slumped 2.3 percent to $7,575 a ton ($3.44 a pound)
Aluminum, lead and zinc fell to the lowest since November in London. Nickel and tin also dropped.