Copper registers strong weekly gains

Prices erase earlier losses at LME to end higher for fifth straight day

Copper prices ended higher for fifth straight day at Comex on Friday, 23 July 2010. Steady dollar, better than expected report on the housing front during the week and strong earning reports led to higher metal prices on Friday.



At USA, copper futures for September delivery ended higher by 2 cents (0.7%) at $3.19 a pound on Friday. For the week, copper ended higher by 8.5%. 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 3.5%.

On Friday, at LME, copper for delivery in three months erased earlier losses and ended higher by $35 (0.4%) at $7,035. Prices dropped by almost 1% earlier during the day. 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 on Friday, better-than-expected bottom lines came from Dow components American Express, McDonalds, Microsoft and Verizon. Among the more widely held names to report, Amazon.com was the only one that came short of the consensus estimate.

In the much awaited bank stress tests, most European banks passed the tests. But market participants were generally unfazed by the midday announcement. That was largely because the stringency of the tests was unclear and the tests didn't really do anything to address concerns about the pace of the economic recovery.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, remained steady.

Among economic data during the week, 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.

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.

Among other metals traded in the LME on Friday, lead ended 0.3% higher at $1,938 a ton and zinc ended 0.2% higher at $1,935 a ton. Nickel ended 1% higher at $20,461. Aluminum ended 0.3% higher at $2,050 a ton.