Copper rises for second consecutive day

Slipping dollar increases the appeal of red metal as alternate investment

Copper prices ended higher on Tuesday, 09 February 2010. Prices rose as the dollar weakened thereby increasing the appeal of commodities as an alternate investment. Prices rose for second consecutive day. Today the dollar slipped following conflicting news about Greece's fiscal health and on conflicting reports whether Germany will come to its rescue.

At USA, copper futures for March delivery ended higher by 7.7 cents (2.6%) at $2.99 a pound. This year, till date, copper is lower by 13%. Copper ended FY 2009 higher by 140%.

At LME, copper for delivery in three months ended higher by $77 (1.2%) at $6,527. 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.

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

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.8%. The euro advanced by almost 1% on reports that Michael Meister, deputy leader of the Christian Democratic Union/Christian Social Union in Bundestag, confirmed a rescue plan for Greece.

The dollar had risen to seven month high against its counterparts last week. Concern for the fiscal health of Greece had sent many global participants to seek safety in the U.S. dollar during recent sessions. However, speculation today that Greece could receive help from Germany gave the euro strength.

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 6.15 (2.04%) at Rs 307.05/Kg. Prices rose to a high of Rs 308/Kg and fell to a low of Rs 300.6/Kg during the day's trading.

Among other metals traded in the LME on Tuesday, lead ended 1.4% higher at $1,992.75 a ton and zinc ended 0.8% higher to end at $2,038 a ton. Nickel ended 0.8% higher to end at $17,407. Aluminum ended 0.7% higher at $2,026 a ton.