By Leia Michele Toovey- Exclusive to Copper Investing News

With copper prices considered a barometer of economic growth, it is no surprise that the metal is having a rough go. 

Japan and Germany are in a full-fledged recession, and China and the U.S. are in bear markets teetering on the brink. The metal has lost more than half of its value since June 30 as declines in manufacturing; tighter credit markets and bank losses eroded global growth. Copper is headed for its first annual loss since 2001, the last time the U.S. was in a recession.

With pessimism reining the market sentiment, copper prices continue to reflect the worst case scenario. This Monday, Copper prices fell on signs that the global economic slump is deepening, damping demand for the metal used in industry and construction. Copper futures for March delivery fell 4.8 cents, or 2.8 per cent, to $1.667 a pound on the Comex division of the New York Mercantile Exchange. That marks the biggest percentage drop for a most-active contract since November 11. Analysts have now revised their 2009 price forecasts, and copper’s was nearly halved. The metal will average $1.70 next year, compared with a previous forecast of $3.00. Hedge-fund managers and other large speculators reduced net- short positions, in copper futures in the week ended November 11, according to U.S. Commodity Futures Trading Commission data. On the London Metal Exchange(LME), copper for delivery in three months dropped $160, to $3,660 a metric ton ($1.66 a pound).

On Wednesday, U.S. copper futures slid 3.6 per cent, as the government reported that in October the U.S. consumer price index experienced its sharpest drop on record. The sentiment copper is experiencing is on par with the base metals. Gold, on the other had saw demand jump 18 per cent year-over-year to 1,133.4 tonnes in the third quarter, reversing a weaker trend earlier this year. This came as investors hoarded gold bullion coins and bars as a safe haven from conventional stock market trading.  News that LME stockpiles rose to the highest level since March 2004 also weighed on copper. Copper for December delivery closed down 6.05 cents, or 3.6 percent, at $1.6015 a lb on the New York Mercantile Exchange’s COMEX division.

Indian copper futures continued with their downtrend on Thursday as the global recession deepened and demand for industrial metals faded, analysts said. At 3.59 p.m., the benchmark November copper MCCX8 on the Multi Commodity Exchange of India (MCX) was down 2.06 per cent at Rs 175.9 per kg.  Shanghai copper prices fell by their 4 per cent to a four-year low on, following a 4 per cent slide on the LME as weak housing data, rising stocks and a firmer dollar continue to gnaw at market sentiment. Shanghai’s benchmark third-month copper contract SCFc3 fell 1,160 Yuan to 27,690 Yuan; it’s weakest since December 2004.

Company news

Chile’s Codelco, the world’s biggest copper producer, has cut its surcharge on sales to China to encourage buyers to enter long-term contracts as global growth slows. The company will reduce its fee, added to copper prices to cover shipping and insurance costs, to $75 a metric ton for China in 2009 from $110 a tonne this year. In the past, Codelco was bullish on Chinese demand, charging them a higher surcharge compared to buyers elsewhere in Asia.  Now, with demand shrinking Codelco feels the need to intice the Chinese buyer into purchasing copper. The premium is added to the price of copper for immediate delivery on the LME for supplies on long-term contracts.

Teck Cominco has elected to end its participation in the Petaquilla copper project. As a result of Teck Cominco’s departure, Inmet (TSX:IMN) will acquire from Teck Cominco its 26 percent interest in Minera Panama, S.A. (MPSA), the Panamanian company that is the owner of the Petaquilla project. For the purchase price of approximately US$30 million Inmet will become the 100 per cent owner of the project. Closing of the transaction is expected to occur in early December. Inmet will continue to advance the Petaquilla project but in light of the current market condition will remain prudent and disciplined in its approach in doing so by finding the right balance between advancing the project and preserving its cash.