Copper stays strong

Base metal prices go up riding on the back of strong economic data

Red metal prices ended higher on Monday, 05 April 2010. Prices rose as the dollar weakened. Prices also rose along with other commodities on anticipation of higher demand in coming months, which arose following better than expected economic reports.

At USA, copper futures for May delivery ended higher by 5 cents (1.3%) at $3.63 a pound. Prices gained 5.3% last week. In March, copper gained 7.5%. Copper gained about 6% for the first quarter, buoyed by data from the U.S. and other countries reinforced expectations that the global economic recovery was on track. On a year to date basis, in 2010, copper is higher by 8%.

Prices have almost doubled in the past twelve months due to higher imports from China. Copper ended FY 2009 higher by 140%.

On Monday, at LME, copper for delivery in three months ended higher by $93 (1.2%) at $7,978. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against basket of six other currencies slipped by 0.2%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter.

Among economic reports scheduled on Monday, The National Association of Realtors in US reported on Monday, 05 April 2010 that there was a seasonally adjusted 8.2% increase in its pending home sales index in February. The NAR's index tracks sales contracts on existing homes, and is seen to be a good indicator of actual sales, which are recorded a month or two later at closing.

Among other economic data, The Institute for Supply Management in US reported on Monday, 05 April 2010 that the ISM non-manufacturing index rose to 55.4% from 53.0% in February. The gain was stronger than expected. Market was expecting the index to rise to 54%. The report indicated that activity in the service sector of the U.S. economy improved markedly in March, indicating that the recovery is broadening out.

The Labor Department in US reported on Friday, 02 April 2010 that the U.S. economy created 162,000 jobs in March 2010. It was the largest seasonally adjusted increase in nonfarm payrolls in three years. The unemployment rate was steady at 9.7%. The report detailed that nonfarm payrolls rose for just the third time in the past 27 months.

As per latest data, copper stockpiles at LME fell by 7% till date from its February 2010 high levels.

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%.

At the MCX, copper for February delivery closed lower by Rs 0.4 (0.11%) at Rs 355.3/Kg. Prices rose to a high of Rs 358.1/Kg and fell to a low of Rs 352.8/Kg during the day's trading.

Among other metals traded in the LME on Monday, lead ended 0.7% higher at $2,225 a ton and zinc ended 0.5% higher at $2,414 a ton. Nickel was little changed at $25,075. Aluminum ended 0.3% higher at $2,358 a ton.