Strong Chinese data boosts copper prices

Prices rise the most in three days

Strong trade data from China boosted red metal prices on Monday, 11 January 2010. The weak dollar also aided in boosting red metal prices.

At USA, copper futures for March delivery ended higher by 4.05 cents (1.2%) to 3.441 a pound. It was the largest gain by red metal in three days. Last week, copper ended higher by 1.6%. This year, till date, copper is higher by 2.8%. Copper ended FY 2009 higher by 140%.

At LME, copper for delivery in three months ended higher by $106.5 (1.4%) at $7,567.5. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. 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 by almost 0.8%. It fell to a three-week low against the euro today.

Yesterday, Chinese government report showed that exports climbed for the first time in 14 months and imports reached record highs. China's imports surged 55.9% in December, while exports rose 17.7% from the same period a year ago. The reports showed that shipments of copper and copper products into China rose to about 369,400 metric tons in December 2009. That was up 27% from November and 29% from a year earlier.

In addition, China's Finance Minister pledged to spend the full amount of planned stimulus in 2010, despite improvements in its economy and efforts to control bank lending.

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

As per latest data, inventories of copper in warehouses monitored by the LME rose for a 47th day to 515,200 tons.

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 higher by Rs 0.45 (0.13%) at Rs 345.25/Kg. Prices rose to a high of Rs 350/Kg and fell to a low of Rs 344.7/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead gained 2.8% to end at $2,604 a ton and zinc gained 3.6% to end at $2,612 a ton. Nickel gained 3.1% to end at $18,450. Aluminium gained 2.2% to end at $2,333 a ton.