18 January 2007 | Antony Barton
Copper fell to its lowest price for nine months in early January.
It traded at $5,625 (£2,884) a tonne earlier this month, the lowest since April, and suffered a 10 per cent slide within three days. The price was around 36 per cent down from its $8,800 (£4,560) high in May last year but almost triple its price four years ago (News, 11 May 2006).
Car production, power grids and construction pushed up copper prices fivefold between 2001 and the end of 2006. Asian countries, which relied on the metal for building projects, were central to driving up the price.
Andrew Cole, senior base metals analyst at Metal Bulletin Research, told SM he was not surprised that copper had fallen, but by how far: "It is a combination of weak demand from the US due to the housing slowdown, Chinese consumers playing a waiting game and investors repositioning themselves with a less bullish stance towards this market's prospects."
He added the Chinese were likely to buy with vigour over the next few weeks to replace supplies after the government stockpiling agency and manufacturers de-stocked heavily last year.
The speed at which copper prices fell was far slower than the speed with which they rose and Cole said copper could soon reach a more familiar price.
When asked whether other metals would follow the same trend, he said each was following its own.
Aluminium is in strong demand but production is surging, especially from China, pointing to a drag on
price through surplus in 2007.
Tin prices, which also fell this month, depend on how the Indonesian government's crackdown on the tin smelting industry impacts on its supply. The situation will be easier to determine over the next month.
Oil also fell sharply this month, with prices in New York and London falling to below $56 (£29) a barrel for the first time since 2005.