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Copper Falls on Better Outlook for Supply, Worse for Demand

August 1, 2011 at 17:37 by Andriy Moraru

Copper futures contract price fell today, influenced by several factors. First, the US debt-lifting and deficit-cutting agreement threatens to weaken the global consumption levels. Second, decreasing manufacturing PMI in US is hinting lower demand for industrial raw materials. And third, one of the biggest Chilean copper mines returned to its normal operation.

Last night, the Democrats and the Republicans reached an agreement regarding the US maximum debt limit, increasing it by $2.1 trillion and deciding to cut the budget deficit by $2.5 trillion during the next decade. While it should be considered a good event for the global markets, the even spurred fear among the investors that the global growth will slow down.

Manufacturing PMI (purchasing managers index), which indicates the industry sentiment, decreased by 4.4 percent in the United States (from 55.3 percent to 50.9 percent), signaling a declining demand for the industrial metals, including copper.

While the labor strikes continue at Chile’s biggest mine Escondida, the 24-hour strike has ended at country’s another mine — Doña Inés de Collahuasi. It accounts for about 3 percent of the global copper production.

Copper futures fell from $449.90 to $440.40 or about 2.1 percent as of 17:31 GMT on COMEX today. The daily low was reached at as low as $437.60 — the lowest level since last Monday.

If you have any questions and comments on the commodities today, use the form below to reply.

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