Base metals turn strong

Chinese reports lead strength to prices

Copper prices registered strong gains on Monday, 13 September at Comex. Prices rose as China came out with some optimistic economic reports and as dollar weakened.



At USA, copper futures for September delivery ended higher by 7 cents (2.1%) at $3.479 a pound on Monday. Last week, price fell by 2.7%. For the month of August, copper ended higher by 1.8%. July, copper had 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.

On Monday, at LME, copper for delivery in three months ended higher by $144 (1.9%) at $7,630. Prices had crossed the $8,000 mark for first time since 2008 on 6 April 2010. On 3 July, 2008, prices had touched an all time intra day high of $8,940. Copper ended FY 2009 higher by 140%.

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.

Over the weekend, data showed that China's consumer price index in August rose at its fastest rate in almost two years. Driven higher by China's worst flooding in years, the consumer price index, a key inflation gauge, gained 3.5% from a year earlier and 0.2% from July.

In other economic data, China's industrial growth in August increased to 13.9%, up from 13.4% in July. Retail sales of consumer goods added 18.4%, up 0.5% from the prior month. Fixed-asset investment in China's cities surged 24.8% year to date, slowing slightly from the 24.9% increase through July.

Last week Japan raised its second quarter growth figures. Separate data showed that China's August imports were up 35.2% year-on-year to $119.27 billion, against a 25% increase expected. Crude imports also increased significantly. Exports climbed 34.4% to $139.3 billion, against an expected 35% increase.

In the currency market Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.8%.

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 Monday, lead ended 3% higher at $2,251 a ton and zinc ended 0.8% higher at $2,194 a ton. Nickel was up 1.6% at $22,850. Aluminum ended 1% higher at $2,225 a ton.

At the MCX, copper prices for November delivery ended higher by Rs 6.35 (1.8%) at Rs 355.75/Kg. Prices rose to a high of Rs 357.25/Kg and fell to a low of Rs 349.9/Kg.