Copper prices declined on Monday to new one-month lows after being weighed down by a disappointing Japanese trade report which dampened risk appetite. Japan’s trade deficit grew more than expected in September compared to a year ago, widening the most since May 2011, soon after the devastating earthquake.
This raises concerns about recovery in the world’s third largest economy, as slowing Japanese manufacturing will result in lower demand for commodities.
Data show that Japan’s exports declined more than expected by 10.3 percent in September compared to a year earlier, leaving a trade deficit of 558.6 billion yen. A 9.9 percent export decline was predicted.
Adding to a weak demand outlook for copper are weaker earning by major US corporations. North American stock markets declined sharply on Friday, recording their worst day since late June, in reaction to disappointing results from Dow components General Electric and McDonald’s . These companies are both barometers of the overall health of the US economy.
Also bringing copper prices down is China’s sluggish economic recovery. A recent rise in copper inventories is partly due to China’s slower demand for copper.
Three-month copper on the London Metal Exchange fell to as low as $7,964.25 in early Monday trading, its lowest since September 10.