Copper posts for first annual fall in 3 years

Copper rose in the last session of 2011 but sharp losses from earlier in the year caused the base metal its first annual decline in three years.

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Copper rose in the last session of 2011 but sharp losses from earlier in the year caused the base metal its first annual decline in three years.

Benchmark copper on the London Metal Exchange climbed 2.4 percent to close Friday's session at $7,600 a tonne.

In New York, US copper's most-actively traded contract, March, settled up 2 percent on the day at $3.4360 per lb.

For 2011, though, both LME and US copper showed a 21 percent drop due to losses from earlier in the year when the metal was sold down on fears related to the European debt crisis and an economic slowdown in China.

This year's decline was a stark contrast with the past two years when copper rallied back from losses sustained during the 2008 financial crisis. The metal gained 140 percent in 2009 and 30 percent last year.

Since hitting all-time highs of nearly $10,200 a tonne in February, copper has lost about a quarter of its value.

“The single major factor behind this is the unfolding of the euro zone crisis, which had some direct and indirect impacts on metals,” said BNP Paribas analyst Stephen Briggs.

“Another key factor was the economic slowdown in China ... There is still a risk of hard landing, and perhaps the market is concerned about that,” he added.

China's factory sector shrank in December as demand at home and abroad slackened, a purchasing managers' survey showed on Friday. China accounts for 40 percent of the world's refined copper consumption.

De-stocking in China this year of a wide variety of metals has surprised market players and analysts, who had forecast much higher prices for copper and other materials such as aluminium, lead, nickel and tin.

Aluminium fell 18 percent on the year and lead lost 20 percent, while zinc and nickel tumbled 25 percent.

Tin fell the most among the metals in 2011, losing 28 percent. - Reuters

Source: http://www.iol.co.za/copper-posts-for-first-annual-fall-in-3-years-1.1206534

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