Copper hit the bottom low on Monday. Copper for March delivery is the most actively traded contract and on Tuesday it dipped further after being traded at $3.2150, which was down 5% from Monday.
The price of this futures contract went further below on Wednesday when it was traded at below $3/pound in Comex in New York. Copper’s11% slump from the previous year is the worse performance compared to all 34 commodities, tracked by Bloomberg.
Experts predict that in 2014 difference between global consumption of copper and its production will see a deficit of 81000 metric ton. Last year, it was more than 172000 tons.
France and China are responsible for copper’s hitting low. Industrial production in France dropped in this year’s January leading to declining business confidence. China being the main culprit reported a trade deficit of 22.98 billion U.S dollars that resulted due to 18.1% fall in its export in February 2014 in comparison with previous year.
In January 2014, China’s export saw 10.6% year over year increase. Observing that, economists predicted a median forecast of 5% expansion. China’s import however saw 10.1% rise. In January, it was 7.1% increase from median forecast.
The import and export tally shows that based on Chinese currency, export in February 2014 was 20.4% whereas import was up 7%. Because of China’s poor export data, copper has been seeing falling price.
A market strategist name Tim Evans said, “When you have a series of data, especially covering two major economic zones as China and the European Union do, that would suggest weaker demand,” Copper investors are currently worried about the possibility of liquidation because 60% of China’s total copper stock is used as trade collateral.
A forex strategist called Boris Schlossberg said, “shaken the foundations of the copper market which in China is used as much for financing transactions as for its commodity properties,”
Gold for April delivery, which is currently traded at $1370.70 is up 1.77%. On Monday, gold settled at $1341.40 which was up 0.2% from $1338.10. Earlier in the session, trading started at a low of $1327.50. When gold futures closed on 1% lower on Friday due to more than expected employment trend in US. The expected number of job was 140000 but 175000 jobs were actually added in February.