Copper strengthens

Prices rise as economic data surpass expectations

Copper prices ended substantially higher at Comex on Wednesday, 04 August 2010. Prices rose to three-month high figure following better than expected economic data.



At USA, copper futures for September delivery ended higher by 5 cents (1.4%) at $3.4 a pound on Wednesday. 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 3.3%.

On Tuesday, at LME, copper for delivery in three months ended higher by $80 (1.1%) at $7,505. 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 economic data expected for the day, the July ADP Employment report showed that 42,000 jobs were added to private payrolls last month. The figure was greater than the 25,000 additions that had been widely expected. This led to some positive momentum among stocks since the very start of the day.

In a separate report, Institute for Supply Management's report on the service sector came in higher than expected. The index rose 54.3 in July, from 53.8 in June.

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

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 3.7 (1.08%) at Rs 345.65/Kg. Prices rose to a high of Rs 346.4/Kg and fell to a low of Rs 339.85/Kg.

Among other metals traded in the LME on Wednesday, lead ended 0.9% higher at $2,205.25 a ton and zinc ended 1% higher at $2,106 a ton. Nickel ended marginally higher at $21,652. Aluminum ended 0.5% higher at $2,215 a ton.