Oil price shorting out coppers's electricity

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

OIL PRICE SHORTING OUT COPPER'S ELECTRICITY

By Darcy Keith BridgeNews October 24, 2000 NEW YORK -- Just a month ago, sentiment in the copper industry couldn't have been much more upbeat, with rapidly declining inventories and robust demand pushing prices to three-year highs.

But with the recent spike in crude oil prices and the drubbing in the stock market, that sentiment has quickly soured. Prices have dropped back to levels last seen in late August amid increasing evidence that consumption is starting to slow.

Copper, because of its use in construction applications such as wiring and plumbing, is closely linked to economic conditions. Demand was robust last summer, with orders for wire and rod mills often outpacing what could be produced.

Futures prices on the Commodity Exchange in New York surpassed 94 cents a pound in mid-September, and many forecasters were feeling confident they would hit $1 a pound and beyond by the end of the year. But those predictions are changing.

For instance, Bill O'Neill, director of futures research for Merrill Lynch, last week downgraded his outlook on copper, saying prices could drop to as low as 80 cents in coming months. Prices are currently hovering near 86 cents.

O'Neill said the consensus is that copper demand will be down 10 percent to 15 percent in the third and fourth quarters compared with year-earlier periods.

The main culprit is higher crude oil prices, which have already heightened inflationary pressures and threaten to significantly slow world demand growth. The slew of poor third-quarter corporate earnings results and the downturn in equity prices--pointing to much less favorable economic times ahead--are also denting sentiment for copper.

http://cnews.tribune.com/news/tribune/story/0,1235,tribune-nation-79855,00.html

-- Martin Thompson (mthom1927@aol.com), October 25, 2000

Answers

Copper is a good barometer of coming financial conditions.

-- JackW (jpayne@webtv.com), October 26, 2000.

Copper is a leading-edge indicator of what's coming, economically, because it is such a basic product. It's used in so many things.

-- Billiver (billiver@aol.com), October 26, 2000.

I keep seeing all these indicators of a sharp economic downturn, preceded, presumably, by a big stock market sell-off.

If this is going to happen, I sure hope it will be in time to blow Gore out of the water on November 7.

-- Uncle Fred (dogboy45@bigfoot.com), October 26, 2000.


I keep seeing all these indicators of a sharp economic downturn, preceded, presumably, by a big stock market sell-off.

If this is going to happen, I sure hope it will be in time to blow Gore out of the water on November 7.

-- Uncle Fred (dogboy45@bigfoot.com), October 26, 2000.


Moderation questions? read the FAQ