Red metal rises for second straight day

Prices rise due to slipping LME inventories

Copper prices ended higher for second straight day at Comex on Tuesday, 20 July 2010. Prices rose due to slipping LME inventories.



At USA, copper futures for September delivery ended higher by 6 cents (2.2%) at $3 a pound on Tuesday. 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 9.8%.

On Tuesday, at LME, copper for delivery in three months ended higher by $75.5 (1.2%) at $6,585.2. 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%.

LME-monitored copper inventories fell for the twenty- third straight day to 419,600 tons, the lowest level since middle of November 2010.

The only economic report scheduled for the day showed a 5% month-over-month decline in housing starts for June. That took starts to an annualized rate of 549,000 units, which is below the annualized rate of 575,000 units that had been widely expected. In contrast, building permits for June increased 2.1% month-over-month to an annualized rate of 586,000, which is above the annualized rate of 572,000 units that had been widely expected.

Companies that disappointed with their earning reports were IBM and Goldman Sachs. Johnson and Johnson too issued a downside forecast though the company's earnings beat expectations.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.3% after rising 0.5% earlier in the day and also dipping in the negative territory in between.

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 5.8 (1.9%) at Rs 314.25/Kg. Prices rose to a high of Rs 314.8/Kg and fell to a low of Rs 308.9/Kg.

Among other metals traded in the LME on Tuesday, lead ended 1.3% higher at $1,798.5 a ton and zinc ended 2% higher at $1,844 a ton. Nickel ended 1% higher at $18,980. Aluminum ended 0.2% higher at $1,976 a ton.