By Leia Michele Toovey- Exclusive to Copper Investing News

On the Shanghai Exchange, copper has tumbled 18 per cent this week alone, putting the year’s cumulative losses at 41 per cent. The current price point of copper puts it on par with the level it was at in December 1999. Copper for January delivery dropped 2,170 Yuan, or 6 per cent, from the previous settlement price, to 33,900 Yuan ($4,962) a tonne at the exchange’s opening.

On the London Metal Exchange, three month delivery slumped as much as much at 7.3 per cent on Thursday, hitting $3,950 per tonne.  The price of copper in New York dropped below $2.00 per pound. At the New York Mercantile Exchange’s COMEX division, copper for December delivery fell as low as $1.9920 a pound, before settling at $2.007 a pound, down more than 5 per cent from previous session’s closing.  At this level, current copper prices are on par with December 1999 levels.

Other base metals took a hit too, among other LME-traded metals, aluminum was down 1.3 per cent at $1,980 a ton, zinc lost 4.1 per cent to $1,093, lead tumbled 5.4 per cent to $1,193, and tin slipped 3 per cent to $11,200 by 2:04 p.m. in Singapore. Falling metals prices and a worsening demand outlook has prompted world producers to cut back output in nickel, aluminum and zinc, but most copper producers are still making money.

Copper demand is considered an indicator of global economic growth because of its wide use in the construction sector. Currently, base metal losses are worsening due to a slowdown around the globe. Confidence that Chinese demand will hold steady was shaken up on Monday after data showed the country’s economic growth rate fell to 9 per cent in the third quarter from 10.1 per cent in the second quarter, and factory output dropped to a six-year low.

Adding to negative sentiment, the US dollar hit its highest peak in 1-1/2 years versus a basket of other currencies. Metals are priced in US dollars, which makes them expensive for holders of other currencies when the US dollar rises. The euro also took a big hit, trading at $1.2760 per dollar from $1.2855 late yesterday, the weakest level since November 2006, as global equities plunged.

Copper stocks in LME warehouses fell 6,500 tonnes to 205,900 — still about 90 per cent above the lows for this year seen in May and accounting for around four days of global consumption.

Company news

Freeport-McMoRan Copper & Gold reports that its third-quarter profit has fallen by nearly a third.  For the three months ended Sept. 30, the Phoenix-based gold and copper miner posted net income of $523 million, or $1.31 a share, down from $775 million, or $1.87 a share, a year earlier. Operating income fell to $1.13 billion from $1.88 billion.  Revenue for the quarter fell nearly 9 per cent to $4.62 billion from $5.07 billion a year ago. The company claims that a steep drop in copper prices combined with a dramatically weaker global economy has dragged down the bottom line.  The company is now forced into cost cuts at existing operations, and they will have to defer capital spending on certain projects.

The top copper producer in China, Jiangxi Copper Co, has set up an emergency unit to deal with the volatile markets, and will tighten controls over futures positions. On Tuesday, Jiangxi reported a drop in profit of 27 per cent in the third quarter of 919.5 million Yuan, including 172 million Yuan in investment losses. The report scared many investors, and corporate bonds were unloaded on the market.  The company hopes that the emergency unit will help to maintain investor confidence.

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