Strong day for base metals

Hopes of economic recovery pull prices higher

Copper prices ended higher at Comex on Tuesday, 20 April 2010. Prices rose as overall sentiments improved following better than expected batch of earning reports. Hopes of quick economic recovery boosted prices.

At USA, copper futures for July delivery ended higher by 1.75 cents (0.5%) at $3.5355 a pound on Tuesday. The contract had shed 3.1% in past three sessions. Last week, prices lost 1.5%. 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 4.6%.

Prices have increased by almost 68% in the past twelve months due to higher imports from China. Copper ended FY 2009 higher by 140%.

On Tuesday, at LME, copper for delivery in three months ended higher by $95 (1.2%) at $7,790. Prices had crossed the $8,000 mark for first time since 2008 last Tuesday, 6 April. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

Goldman Sachs triggered a selloff last week when it was learned that the firm was charged with fraud by the SEC, but the company came back into focus this morning. Though the company bested earnings expectations with ease, concern about fallout from fraud charges was stoked by news that Britain's financial regulator started a formal enforcement investigation into the firm.

There were a bevy of other blue chips out with better-than-expected results and IBM and Johnson & Johnson were among them. Among other widely held names, Coca-Cola topped the consensus earnings estimate and Procter & Gamble hiked its dividend. These reports improved overall sentiments and raised hopes of crude demand in coming months.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell initially but then rose by 0.15%.

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 April delivery closed lower by Rs 0.4 (0.11%) at Rs 344.4/Kg. Prices rose to a high of Rs 348.51/Kg and fell to a low of Rs 344.1/Kg during the day's trading.

Among other metals traded in the LME on Tuesday, lead ended 3.5% higher at $2,320 a ton and zinc ended 1.8% higher at $2,445 a ton. Nickel ended 0.6% higher at $27,550. Aluminum ended 0.9% higher at $2,415 a ton.