Copper inches up

Prices go up on strong demand hopes from China

Copper prices once again ended higher at Comex and LME on Monday, 21 December 2009. Prices rose as traders anticipated that the demand for metals would rise in the coming months, especially from China, as the country is targeting an 8% growth in the next couple of years. Prices went up despite the relatively strong dollar.

At USA, copper futures for March delivery ended higher by 2 cents (0.6%) to 3.1585 a pound. Last week, copper remained almost unchanged. Copper ended November 2009 higher by 6.6%. On a year to date basis, copper has climbed 116%.

On the London Metal Exchange, copper for delivery in three months ended higher by $78 (1.3%) at $6,935.65 a metric ton. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

In the currency market on Monday, the greenback started the day relatively weak with the dollar index trading with a fractional loss after it was down roughly 0.2% earlier this morning. Then, the dollar's move caused a pullback in commodity prices. The dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.3%. Last week, the dollar index gained almost 1.7%.

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

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 February delivery closed at Rs 324.85/Kg. The closing price was Rs 0.2/Kg (0.06%) higher than previous closing price. Prices rose to a high of Rs 325.2/Kg and fell to a low of Rs 324.1/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead fell marginally to $2,350.5 a ton and zinc gained 1.3% to end at $2,438.3 a ton. Nickel gained 1.4% at $17,340. Aluminium rose 0.5% at $2,249 a ton.