Strong day for red metal

Hopes of higher demand and weak dollar pull up prices

Copper prices ended considerably higher on Tuesday, 03 January 2012 at Comex. A weak dollar and better than expected economic data at Wall Street pulled up metal prices.

Copper for March delivery ended higher by 9 cents (2.7%) at $3.53 a pound at Comex on Tuesday. For the year 2011, copper shed 23% following a 30% increase in 2010 and a 140% jump in 2009, boosted by surging demand from China's manufacturers. China accounts for 40% of the world's refined copper consumption.



Red metal prices for three-month-delivery at LME rose $119.5 (1.6%) to $7,719.5 a metric ton on Tuesday.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.7%. For the year 2011, the dollar index had gained 1.6%.

Metal traders were also reacting to news late last week that China's manufacturing rose in December. The China Purchasing Managers' Index for December stood at 48.7, compared to a 47.7 reading for November.

US stocks kicked off the New Year 2012 with a bang on Tuesday, 03 January 2012. Stocks are holding their gains in the wake of a couple of doses of economic data. Both proved better than expected. Wall Street was closed on Monday, 02 January 2012 in lieu of New Years Holiday.

Among economic data expected for the day, the Commerce Department reported today that outlays for U.S. construction projects rose 1.2% in November, 2011. The gain in construction spending in November was above expectations of a 0.5% gain. However, October construction spending was revised down to show a 0.2% decline from the previous estimate of a 0.8% gain. In November, spending on private construction rose 1.0% and residential construction rose 2.0%. Spending on public projects rose 1.7%.

Separate report showed that manufacturing activity accelerated in December, highlighting the U.S. economy's momentum heading into the New Year. The Institute for Supply Management's manufacturing index for December climbed to 53.9% from 52.7% in November, which is a six-month high. Market had anticipated a 53.0% reading. Any reading above 50% indicates expansion. Of the 18 industries surveyed, nine reported growth while nine reported contraction.

Among other traded metals at LME on Tuesday, lead in London rose 0.2% to $2,025 a ton and nickel closed higher by 2% at $18,800 a ton. Aluminum closed higher by 1.2% at $2,056 a ton, and zinc closed higher by 1% at $1,870 a ton.

At the MCX, copper prices for February delivery ended higher by Rs 6.1 (1.5%) at Rs 413.9/Kg. Prices rose to a high of Rs 415.3/Kg and fell to a low of Rs 408.4/Kg.