Copper gains some strength

Prices rise as LME inventories drop

Copper prices ended higher on Thursday, 12 August 2010. Prices rose as recent data showed that LME inventories have dropped 19% this year till date.



At USA, copper futures for September delivery ended higher by 3 cents (1%) at $3.29 a pound on Thursday. Copper gained 1% last week. For the month of July, copper ended higher by 12% as concerns about a slowdown in the global recovery abated, pushing the red metal to its best month since April 2009.

Before this, 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 higher by 2.8%. On a yearly basis, copper has gained 19%.

On Thursday, at LME, copper for delivery in three months ended higher by $55 (0.8%) at $7,255. 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 LME stockpiles have declined for five straight months, the longest slide since July 2007. Supplies are down 19% this year. Before today, prices had slipped 1.1% this month on reports of an economic slowdown in the U.S. and China, the biggest consumers of copper.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.4%.

The Labor Department in US reported on Thursday, 12 August 2010 that the number of initial claims for regular state unemployment insurance benefits rose 2,000 to 484,000 in the week ended 7 August. It reached the highest level since February. Market had expected a level of 463,000.

The four-week average of initial claims, a more accurate gauge of employment trends, rose 14,250 to 473,500, also the highest level since February. For the prior week, the initial claims level was revised higher to 482,000 from a previous estimate of 479,000. The number of workers who continued to receive state unemployment checks fell by 118,000 to 4.45 million in the week ended 31 July. The four-week average of these continuing claims fell 64,500 to 4.52 million.

In addition, the Labor Department in US reported on Thursday, 12 August 2010 that prices of goods imported into the United States increased 0.2% in July, after two months of declines. Fuel-import prices rose 2.1% in July, while prices for non-fuel imports fell 0.3%. Import prices are up 4.9% in the past year, with a gain of 14.8% for fuel imports, and a 2.8% increase for non-fuel imports. Export prices fell 0.2% in July, including a 0.1% decline for agriculture exports, and a 0.2% decline for non-agricultural exports. In June, export prices were down 0.7%. For the year, export prices are up 3.9%.

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 Thursday, lead ended 1.2% lower at $2,041.25 a ton and zinc ended 0.5% lower at $2,027 a ton. Nickel ended 1.8% lower at $21,306. Aluminum ended 0.3% lower at $2,136.25 a ton.