Copper rises for second straight day

Upbeat data and weak dollar hold red metal steady

Copper prices rose for second straight day on Tuesday, 06 October, 2009 at Comex and LME. Prices rose at Comex and LME on anticipation of higher demand in coming months and also the weak dollar.

At USA, copper futures for December delivery ended higher by 6 cents (2.7%) to 2.78 a pound. Copper dropped 2.2% last week. It was the fifth straight weekly drop for copper. Copper ended September, 2009, higher by 0.4%.

On the London Metal Exchange, copper for delivery in three months ended higher by $174 (2.4%) at $6,060 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

After September, it was the ninth straight monthly gain for copper. On a year to date basis, prices are higher by 87.7%.

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

The Institute for Supply Management non manufacturing index reported on Tuesday, 06 October, 2009 that the index rose to 50.9, higher than forecast, from 48.4 in August. Fifty is the dividing line between expansion and contraction.

In the currency market on Tuesday, the dollar index, which measures the strength of dollar against a basket of other currencies, fell by almost 0.6%. The dollar also fell after the Reserve Bank of Australia boosted its cash rate by a quarter of a percentage point to 3.25%, marking the first hike since March 2008.

Also weighing on the greenback was a report that said Gulf-area oil producers, in concert with China, Russia, Japan and France, are planning to end the practice of pricing oil in dollars.

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 287/Kg. The closing price was Rs 0.8/Kg (0.28%) higher than previous closing price. Prices rose to a high of Rs 289.9/ Kg and fell to a low of Rs 285.85/Kg during the day's trading.

Among other metals traded in the LME on Tuesday, lead added 2.4% to $2,140 a ton and zinc added 0.8% to end at $1,886 a ton. Nickel added 1.4% to end at $17,800. Aluminium rose 1.1% to $1,810 a ton.