Copper rises for first time in six days

Prices rise on hopes of reconstruction needs in Japan

Copper prices ended substantially higher at Comex on Wednesday, 16 March 2011. Prices climbed for the first time in six days on expectation that reconstruction needs after Japan's largest quake on record will boost demand in three to six months. Prices had dropped in the last five sessions as US and world stock markets crashed considerably after fearing its worst nuclear catastrophe since Chernobyl nearly 25 years ago.



Copper for May delivery gained 6 cents or 1.5% to $4.2 a pound at Comex on Wednesday. Last week, copper lost 5.8%.

Three-month-delivery copper on the London Metal Exchange ended higher by $187 (1.8%) at $9,305 a metric ton.

For the month of February 2011, copper prices gained 1.3%. Before this, in January, copper prices finished flat.

It is estimated that factory shutdowns, power cuts and the impact on consumer confidence may hurt Japan's GDP for months, while contributing to growth later as the country rebuilds plants, homes and infrastructure. Metals used in Japan, which represents about 5% of global demand, will probably jump after an initial slump as the country rebuilds infrastructure.

A devastating earthquake coupled with a Tsunami rocked Northern Japan last weekend. Fears that the nuclear reactors, damaged by the quake, are at risk of a meltdown added to the country's woes.

Worries about the mounting human and economic toll from the same, which damaged some nuclear reactors pushed US stocks lower once again on Wednesday, 16 March 2011. It was reportedly said that citizens within 50 miles of Japan's Fukushima nuclear power plants should evacuate or remain indoors.

The overall mood among morning participants was further weakened by reports of increased violence and instability surrounding the social and political turmoil in the Middle East and North Africa.

US economic data disappointed on Wednesday. Housing starts for February made a surprisingly dramatic drop of more than 20% to an annualized rate of 479,000, which is the slowest pace in almost two years. Building permits for February fell 8.2% in an unexpected drop.

As for Producer prices, the headline PPI number for February increased by 1.6% for its sharpest spike since June 2009, but core producer prices increased by a much smaller 0.2%.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.5%.

Among other traded metals at LME, lead in London rose 1.1% to $2,536 a ton and nickel gained 2.4% to $25,301 a ton. Aluminum rose 0.6% to end at $2,507 a ton, and zinc climbed 2% to end at $2,327 a ton.

At the MCX, copper prices for April delivery ended higher by Rs 4.65 (1.1%) at Rs 421.65/Kg. Prices rose to a high of Rs 427.75/Kg and fell to a low of Rs 418.45/Kg.