Base metals turn strong

April erases out all of red metal's first quarter gains

Base metal prices ended higher at Comex on Friday, 30 April 2010. A weak dollar increased the appeal of metals as an alternate investment. However, the red metal capped its biggest weekly drop since early February and its first monthly decline since January.

At USA, copper futures for July delivery ended higher by 3 cents (0.8%) at $3.3535 a pound on Friday. For the week, prices lost 5%. In April, copper lost 6.1%. 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 practically unchanged.

Prices have increased by almost 72.5% in the past twelve months due to higher imports from China. Copper ended FY 2009 higher by 140%.

On Friday, at LME, copper for delivery in three months ended higher by $75 (1%) at $7,430. Prices had crossed the $8,000 mark for first time since 2008 on 6 April. On 3 July, 2008, prices had touched an all time intra day high of $8,940.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by 0.3%. The dollar still finished the week with a 0.6% gain, which puts it up 0.5% for the month and up some 5% for the year.

Stiff selling at Wall Street on Friday resulted in the stock market's worst weekly loss since January and marked a weak finish to April. Still, the stock market was able to book its third straight monthly gain. The early tone of trade was tepid as market participants made little response to news that the first quarter GDP hit an annualized rate of 3.2%. The headline number was essentially on par with the 3.3% increase that had been widely expected.

Separately, the Reuters/University of Michigan consumer sentiment index showed that U.S. consumer sentiment improved marginally in late April after sinking earlier in the month. The index rose to 72.2 from 69.5 in mid-April. Market had expected an increase to about 71. March's final reading was 73.6. The index has been largely unchanged since November, remaining at depressed 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%.

Among other metals traded in the LME on Friday, lead ended 0.2% higher at $2,235 a ton and zinc ended 0.9% higher at $2,312 a ton. Nickel ended 1% higher at $25,650. Aluminum ended 1.5% higher at $2,233 a ton.