Global growth shocks drop copper to 2012 low
Copper suffered another sharp drop in New York on Friday with traders reacting to bad economic news from the US in the form of dismal jobs numbers, a crisis in Europe that seems to be stressed to breaking point and a steep drop-off in growth in China, Brazil and India.
The US employment report out on Friday was much weaker than expected and the jobless rate actually creeped back up to 8.2% indicating that the recovery in the world's number one economy – tepid as it was – was now sputtering.
Panic about Spain – which has become so widespread that traders now have a shorthand for it, 'Spanic' – also increased after it was revealed that $100 billion, equal to 10% of the country's GDP, had been withdrawn from the Iberian nation's banks in the first three months of the year.
Also on Friday China's May purchasing managers index, a measure of industrial activity, came in way below market expectations indicating that the world's engine of growth and the main driver of commodity prices is slowing faster than previously thought.
Two other powerhouses have also jolted the resource sector. On Friday Brazil's growth slowed to a crawl coming in at just 0.2% GDP expansion in the first quarter despite having the lowest interest rates in 50 years while earlier this week Indian growth reached the slowest pace in nine years.
Copper for immediate delivery was trading at $3.31 a pound in afternoon dealings on the Comex in New York, down just under 5c on the day. May was the third month of decline and the red metal has now fallen to its lowest level this year.
The copper price – a bellwether for the metals industry – has retreated 16.5% from its February peak and today's price represents a 26% pullback from historic highs hit at the end of July last year of a shade under $4.50 a pound (more than $10,000 a tonne).
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