Copper registers its first decline in three years

Price fluctuations at the start of the year led to copper posting its lowest figures in three years.

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Despite a rise in copper prices over the last session of 2011, sharp losses from earlier in the year led to the metal posting its first annual decline in three years, figures have shown.

The current Eurozone debt crisis and an economic slowdown in the world’s top metals consumer, China, has worsened demand growth prospects for copper, leading to a dent in market confidence, said Stephen Briggs, a BNP Paribas analyst.

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

“Another key factor was the economic slowdown in China … there is still a risk of hard lending, and perhaps the market is concerned about that,” he told Reuters.

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Being an export-orientated economy; China has suffered due to the global economic debt crisis, which has tempered demand for manufactured goods.

Its factory sector shrank in December following slackening demand, a purchase managers’ survey showed on 30 December 2011.

However, there were signs of improvement, with copper up by 1.4% to $7,530/t on 30 December, up from $7,425 at the close on 29 December.

This represented a bounce back after two losing sessions, as signs of improvement in the US economy offset European worries.

“This time last year analysts would have expected much higher prices than we have right now … As much as each of the metals differ greatly, one thing people didn’t expect last year was the extent of Chinese destocking,” concluded Briggs.