Copper is often referred to as a bellwether commodity that reflects business activity in such industries as housing and autos. This past year, both industries have been beaten down, and so too has the price of copper. According to the Wall Street Journal (subscription required), nearby copper prices fell 6.40 cents to settle at $1.2530 per pound. The most active March contract fell 6.45 cents to $1.2810 per pound. The poor housing numbers recently released were just another catalyst in the price decline.
Copper, like many other commodities, has been in a liquidation phase where market participants are selling their inventories to raise cash. Traders have often looked to China for an indication that buying there will spark a rally. However, this did not happen. There was no follow through after a gain in the Chinese market last week.
Very much like the supply situation in oil, there is an 87,000 metric ton surplus of copper, when adjusted on a seasonal basis.
