Red metal turns strong

Strong economic data raises hopes for demand of the metal

Copper prices posted a fresh four-month high on Friday, 03 September as investors hoped the recovery will translate in more demand for the metal, used in construction and industry applications.



At USA, copper futures for September delivery ended higher by 1 cent (0.1%) at $3.5 a pound on Friday. For the week, price rose by 5%. This was the third consecutive weekly gain for the red metal. 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 Friday, at LME, copper for delivery in three months ended almost unchanged at $7,625. 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. On a year to date basis, in 2010, copper is higher by 5%.

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.

The Labor Department in US reported on Friday, 03 September 2010 that the U.S. economy shed 54,000 nonfarm jobs in August, much smaller than an expected figure of 1,00,000. The unemployment rate ticked higher to 9.6% in August from 9.5% in the previous month.

Separately, the Institute for Supply Management in US reported on Friday, 03 September 2010 that growth slowed in the U.S. non-manufacturing sector in August, with a key index hitting 51.5%, compared with 54.3% in July. Market had expected a reading of 53.5%. A reading above 50% indicates expansion, while a reading below 50% indicates a contraction.

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 0.7% lower at $2,141 a ton and zinc ended 1.3% lower at $2,143 a ton. Nickel was little changed at $21,690. Aluminum ended 0.4% lower at $2,136.25 a ton.