Copper futures for September hit $3.2695 per pound on Thursday morning, after hitting a low of $3.2132 as a bigger-than-expected slump in US home sales raised fears that the US economic recovery is beginning to falter.

Sales of existing homes slumped by 27.2% in July to a 3.83 million annual rate, with concurrent effects on demand for copper used in electrical wires and plumbing. A Bloomberg survey of economists had predicted a median level of 4.65 million. Building and construction account for around half of US copper consumption, and the US is the second-largest consumer of the metal after China. The prospects for copper were hit further with the release of the new home sales figures for July. These dropped by 12.4% to 276,000, adding to the possibility of a double-dip recession in the US. Economists had expected sales to be unchanged from the previous month at 330,000. Inventories of copper as recorded by the London Metals Exchange fell by 0.4% to 402,425 tonnes, bringing the year’s decline to 20%. Australian miner BHP Billiton, which reported annual results on Wednesday, took a positive view on copper, saying that strong physical demand for the metal would continue 'where customers are restocking and premiums continue to rise'. This echoes the view of Societe Generale, which expects a slowdown in demand for copper in the US and Europe to be outweighed by continuing high levels of demand from China.

SocGen's views would seem to be reinforced by news that Aluminum [sic] Corp of China, known as Chinalco, is studying copper acquisitions and plans to start building its Toromocho mine in the Central Andes next month. Chinalco's president, Xiong Weiping, said that copper was 'the most important metal' for the company, noting that China imports more than 70% of the ore it requires. Further bullish news for copper emerged from Japan, where copper wire and cable shipments increased for the seventh-month in a row in July. Shipments rose by 2.8% to 59,700 metric tonnes, despite poor second quarter GDP growth in Japan.