NEW YORK, Dec 10, 2010 (Dow Jones Commodities News via Comtex) -- Copper futures printed their highest-ever settlement as robust economic data from China and improving sentiment about the U.S. economy raised expectations of increased demand for the industrial metal.
The most-actively traded copper contract, for March delivery, rose 2.5 cents, or 0.6%, to a record settlement of $4.1120 a pound on the Comex division of the New York Mercantile Exchange. The day's peak price of $4.1430 was still shy of the all-time intraday high of $4.2400 from May 2008, when low volumes helped exacerbate chart-based trading to create an outsized spike.
"Right now all eyes are focused on China," said Sterling Smith, market analyst at Country Hedging in Minnesota. "Their economic data was very good."
China reported record exports and imports in November, a greater-than-expected trade surplus, and increasing property prices.
China's November imports of copper, copper alloy and semi-finished products were up 21% compared with last November at 351,597 tons.
"The Chinese economic juggernaut still seems to be powering forward," MF Global analyst Edward Meir said in a note to clients.
The strong Chinese data--indicating greater demand for copper from a nation that already consumes some 40% of the world's production--add to economic optimism from recently robust manufacturing data from around the globe; rising U.S. exports, retail sales, and consumer confidence; and an expected economic boost from extended U.S. tax cuts.
The backdrop of positive sentiment helped copper shrug off news that China's central bank said Friday it will raise banks' reserve requirement ratio by 0.50 percentage point, the sixth such hike this year. The move, aimed at stemming inflationary pressures, comes as market participants think the Asian nation could raise interest rates soon, with China set to release inflation data Saturday.
Such a move could pressure copper if it limits Chinese demand by crimping economic growth.
Meanwhile, warehouse stocks of copper continue to drop, creating further bullishness among copper-market participants.
Inventories of copper stored in London Metal Exchange warehouses fell 825 metric tons Friday, leaving them at 348,625. Data released Friday by the Shanghai Futures Exchange showed a weekly decline of 833 metric tons to 115,964. The most recent Comex inventory data, released late Thursday afternoon, were down 296 short tons at 68,077.
The first physically backed copper exchange-traded fund also began trading Friday on the London Stock Exchange. Anticipation of extra demand from the ETF Securities' fund has supported the market recently.
The fund will back its shares with a certain amount of metal bought on the market and then warehoused, increasing expectations of further tightening in copper supplies.
Copper settlements (ranges include electronic and pit trading):
Mar $4.1120; up 2.50 cents; Range $4.0670-$4.1430
May $4.1055; up 2.35 cents; Range $4.0695-$4.1350