Copper prices were weighed down amid of the expectation of another recession in Europe despite the latest Greek bailout package. China's sluggish manufacturing sector too is putting downward pressure on red metal.
Investors look to China for clues on copper's moves, with a push for more affording housing pushing up prices on the one hand, while inflation fears keep prices in check on the other.
S&P's European downgrades have no lasting impact on copper prices as hopes are up for China to cut interest rates and spur demand.
Copper is key to Zambia's economic success, which needs Chinese investors. But workers are being abused at Zambia's Chinese-operated mines.
Copper took a tumble as Wednesday's EU finance ministers' meeting was canceled, renewing fears about the Eurozone debt crisis.
Copper tumbled as the once red-hot Chinese economy slows down and Eurozone worries persist.
After finally experiencing upward momentum earlier in the week, copper prices plunged Thursday, as China reported a shrinking trade surplus, and concerns over the European debt crisis took a bite out of the metal’s demand prospects.
Bloomberg reported that Shanghai plans to lower trading costs by increasing storage for copper and aluminum.
Scrap copper is an important source of the red metal. The use of scrap copper is expected to rise in the coming years, as a necessary means to compensate for declining supplies of mined copper.
In an interview with Resource Investing News, Yu-Dee Chang principal at ACE Investment Strategists Inc. attributed the recent volatility of copper prices to the “shift of investment demand in copper from small speculators to larger hedge funds.”
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