Copper prices continue to stay strong

Prices rise due to a host of factors



Copper prices ended higher for fourth straight day at Comex on Thursday, 22 July 2010. Lower dollar, better than expected report on the housing front and strong earning reports led to higher metal prices today.

At USA, copper futures for September delivery ended higher by 7 cents (2.3%) at $3.16 a pound on Thursday. Prices touched a high of $3.193 during intra day trading. Last week, copper ended lower by 4.1%. 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 4.2%.

On Thursday, at LME, copper for delivery in three months ended higher by $150 (2.2%) at $7,010. 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%.

Among the major earning reports expected for the day, UPS bested expectations for the bottom line, and also came out with an increased outlook. Dow components 3M and Caterpillar also reported better-than-expected bottom line results. 3M also issued upside guidance, while Caterpillar raised its forecast so that it is in step with what Wall Street has forecast.

Among other blue chips, AT&T posted an upside surprise and raised its outlook, but Travelers came short of the consensus earnings estimate and even cut its forecast.

Among economic data expected for the day, the National Association of Realtors reported on Thursday, 22 July 2010 that resale of U.S. homes fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million units. That is a better rate than the 5.09 million units that had been widely expected.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 1.1%.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%. Copper fell for three months in a row through June on concern about efforts to curb growth in China, the world's biggest user of the metal.

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.

At the MCX, copper prices for August delivery ended higher by Rs 4.75 (1.5%) at Rs 327.3/Kg. Prices rose to a high of Rs 330.4/Kg and fell to a low of Rs 319.3/Kg.

Among other metals traded in the LME on Thursday, lead ended 2.1% higher at $1,915 a ton and zinc ended 1.5% higher at $1,930 a ton. Nickel ended 1.2% higher at $19,875. Aluminum ended 1.6% higher at $2,025 a ton.