Copper rises for second consecutive day

Prices almost double on a yearly basis

After four consecutive sessions of drop, copper prices rose for second straight day on Wednesday, 16 September, 2009 at Comex and LME. Prices rose today following set of upbeat economic reports renewing hopes of global economic recovery.

At USA, copper futures for December delivery rose 9.15 cents (3.2%) to 2.9365 a pound. Copper fell 0.7% last week. Copper ended August, 2009, higher by 7%.

On the London Metal Exchange, copper for delivery in three months ended higher by $215 (3.5%) at $6,420 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

After August, it was the eighth straight monthly gain for copper. Prices gained 23% in the second quarter. On a year to date basis, prices are higher by 95.5%.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.

The dollar, which has served as a safe-haven asset over the past year because of its low yield, fell back to its lows of the year on Wednesday, after more upbeat U.S. economic reports. The dollar index, which measures the strength of dollar against a basket of other currencies, fell to one year low of 76.15.

The Federal Reserve reported on Wednesday, 16 September, 2009 that USA's factories showed renewed strength in August and the gain in July was much stronger than first thought. U.S. industrial production rose 0.8% in August. Output rose a revised 1% in July, double the initial estimate of a 0.5% gain. The gain in July is the largest since October 2008.

In a separate report, The Labor Department reported on Thursday, 16 September, 2009 that U.S. consumer prices increased a seasonally adjusted 0.4% in August, pushed higher by a 9.1% increase in gasoline prices. In the past 12 months, the consumer price index has fallen 1.5%, largely because energy prices have dropped 23% over that period.

In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.

At the MCX, copper for November delivery closed at Rs 313.5/Kg. The closing price was Rs 7.05/Kg (2.3%) higher than previous closing price. Prices rose to a high of Rs 313.7/ Kg and fell to a low of Rs 305.25/Kg during the day's trading.

Among other metals traded in the LME on Wednesday, lead rose 2.8% to $2,228 a ton and zinc rose 1.8% to end at $1,892 a ton. Nickel rose 3% to end at $17,250. Aluminium rose 1.4% to $1,880 a ton.