Today, copper prices fell the most in two weeks on speculation that the slumping global economy will continue to cut consumption of industrial metals. Yesterday was another story. Copper bolted higher by 3.2% after China announced a $568 billion stimulus package over the weekend.

But while China’s announcement gave the market an initial rally, it faded as fast as it appeared.  That’s because the global stats that keep rolling in are downright horrible. China’s October exports rose at the slowest pace in four months. UK home sales fell to the lowest in 30 years. And before today, copper had plunged nearly 60% from a record in May.

China is the world’s largest consumer of industrial metals, and copper plays a huge part of that consumption. Next year, China’s copper use is expected to slow to at least 3% or 4%, compared to 8% growth this year.

In tonnage terms, China’s copper imports climbed 13% to 231,212 tons in October, but orders for copper products are down up to 40% compared to last year, and smelters are either slashing production or closing their doors.

With that said, copper’s nosedive is quickly approaching a crucial support area near $1.40 a pound — a three-and-a-half year low. Take a look at the following chart:

I expect copper to hit that support area and test that level. Time will tell which way it goes from there.

John Burke, analyst

Last 5 posts by Sean Brodrick

• The Golden Phoenix - February 25th, 2009
• Blessing in Disguise - February 4th, 2009
• What I'm Reading Today - January 7th, 2009
• Gold and Oil Short-Term Trends - January 7th, 2009
• Is Gold Poised for a Pullback? - January 6th, 2009