Copper caps strong weekly gains

Prices rise as LME inventories drop for twenty consecutive weeks

Copper prices ended higher for fifth straight day at Comex on Friday, 09 July 2010. Prices rose due to declining LME inventories and on optimistic global economic reports.



At USA, copper futures for September delivery ended higher by 3.8 cents (1.3%) at $3.0535 a pound on Friday. For the week, copper ended higher by 4.7%. For second quarter, copper dropped 16%. 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 lower by 8.5%.

On Friday, at LME, copper for delivery in three months ended higher by $145 (2.2%) at $6,760. 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. Copper ended FY 2009 higher by 140%.

Latest data showed that inventories at LME dropped 2.3% this week to 436,900 metric tons and are down 13% in 2010. Stockpiles dropped for 20 consecutive weeks. The last time stockpiles had an annual decline was in 2004.

US data on Friday showed that wholesale inventories rose in May as warehouses were restocked with durable goods. Wholesale inventories dropped a little, but they were up by almost 15% from May 2009.

During the week, the International Monetary Fund raised its outlook for global economic growth for 2010 and pegged its forecast for U.S. growth at 3.3%. However, the IMF's updated estimate also warned of looming risk coming out of Europe's debt issues.

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

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.

Among other metals traded in the LME on Friday, lead ended 0.7% higher at $1,845 a ton and zinc ended 1.4% higher at $1,868 a ton. Nickel ended 1.5% higher at $17,700. Aluminum ended 0.5% higher at $1,993 a ton.