Base metals take a big leap

Red metal rises for sixth straight session

Copper prices ended higher at Comex and LME on Monday, 04 January 2010. Upbeat economic reports at US and China, weak dollar and strike concerns at the world's second largest mine took red metal prices higher today.

At USA, copper futures for March delivery ended higher by 5.9 cents (1.8%) to 3.406 a pound. It was the sixth straight session rise for copper. Copper ended FY 2009 higher by 140%.

At LME, copper for delivery in three months ended higher by $125 (1.7%) at $7,500. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

As per latest reports, workers at Codelco's Chuquicamata mine went on a strike from 4th January, 2010, in Chile. The company is the world's biggest copper miner. Workers voted to strike after rejecting a 3.8% pay increase offered by Codelco. The union sought 5%.

Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The metal was also pushed higher by record first-half imports to China, the world's largest user.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell against almost all the counterparts. The dollar index settled for a loss of 0.5%.

Among economic data expected for the day, The Institute for Supply Management in US reported on Monday, 04 January, 2010 that manufacturing sector in US expanded in December for the fifth straight month. The ISM manufacturing index rose to 55.9% from 53.6% in November. It was the highest since April 2006. Market was expecting a modest gain to 54.2%. Readings over 50% indicate that more manufacturing firms said business was improving than said it was worsening.

Also in China, an industry report showed that manufacturing in China, the world's biggest metals user, expanded last month by the most since April 2004.

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 347.35/Kg. The closing price was Rs 3.05/Kg (0.88%) higher than previous closing price. Prices rose to a high of Rs 349.4/Kg and fell to a low of Rs 344.8/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead gained 2% to end at $2,480 a ton and zinc gained 2.1% to end at $2,613 a ton. Nickel gained 1.5% to end at $18,798. Aluminium rose 1.4% to end at $2,260 a ton.